RICHARD T. DAVIS, ET AL. V. PEGGY HENSLEY, CO-ADMINISTRATRIX OF THE RICHARD SCHWARTZ ESTATE, ET AL.
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RENDERED : JUNE 19, 2008
TO BE PUBLISHED
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Claud of
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2007-SC-000066-DG
RICHARD T. DAVIS ; S.R. HALLORAN ;
LARRY TRENKAMP ; SAMUEL H. BEVERAGE;
PAUL S . GRAHAM ; GREG KREUTZANS; and
ANDY DURBAN
v.
APPELLANTS
ON REVIEW FROM COURT OF APPEALS
CASE NUMBER 2005-CA-001785-MR
BOONE CIRCUIT COURT NO. 04-C1-00593
PEGGY HENSLEY, CO-ADMINISTRATRIX
OF THE RICHARD SCHWARTZ ESTATE ; and
MICHELLE SWARTZ, CO-ADMINISTRATRIX
OF THE RICHARD SWARTZ ESTATE
APPELANTS
OPINION OF THE COURT BY SPECIAL JUSTICE JAMES D. HARRIS, JR.
AFFIRMING
The appellants are employees of the Kentucky Transportation Cabinet . The
issue asserted is that they are entitled to "exclusive remedy" immunity from liability for
the death of Richard Schwartz because the Cabinet would have been liable for workers'
compensation benefits had his direct employer not paid them . Although the Boone
Circuit Court granted summary judgment in their favor, the Court of Appeals reversed
on the ground that KRS 342.0011(16) does not include governmental entities within the
definition of a "person ." For the reasons set out, we affirm.
The Kentucky Transportation Cabinet entered into a contract with W . L . Harper
Company for pavement resurfacing on I-275 . The company maintained workers'
compensation coverage on its employees, including Richard Schwartz. On April 16,
2003, a tractor-trailer struck and killed Schwartz when the driver lost control of the
vehicle in a construction zone. Schwartz's estate received workers' compensation
benefits from his employer and filed this civil action, naming the appellants among the
defendants . The estate asserted that they failed to perform their statutory duties to
investigate all problems relating to road construction and maintenance and that the
Transportation Cabinet cannot contract those duties to others.
In affirming the Court of Appeals we are constrained to consider several
provisions of our Workers' Compensation Act.
KRS 342 .610(2)(b) states, in pertinent part, as follows:
A contractor who subcontracts all or any part of a contract
and his carrier shall be liable for the payment of
compensation to the employees of the subcontractor unless
the subcontractor primarily liable for the payment of such
compensation has secured the payment of compensation as
provided for in this chapter . . . . A person who contracts
with another:
(b) To have work performed of a kind which is a regular or
recurrent part of the work of the trade, business, occupation,
or profession of such person shall for the purposes of this
section be deemed a contractor, and such other person a
subcontractor . . . . (emphasis added) .
KRS 342.690(1) states, in pertinent part, as follows:
If an em
secures_Ra ment of compensation as
re uired b this chapter, the liability of such employer under
this chapter shall be exclusive and_ in place of all other
liability of such employer to the employee, his legal
representative, husband or wife, parents, dependents, next
of kin, and anyone otherwise entitled to recover damages
from such employer at law or in admiralty on account of such
injury or death. For purposes of this section, the term
"employer" shall include a "contractor' covered b
subsection (2) of KRS 342.610 , whether or not the
subcontractor has in fact, secured the payment of
compensation . . . . The exemption from liability given an
employer by this section shall also extend to such
employer's carrier and to all employees, officers or directors
of such employer or carrier, provided the exemption from
liability given an employee, officer or director. (emphasis
added) .
If an injured worker's direct employer fails to provide workers' compensation
coverage, KRS 342 .610(2)(b) deems the "up-the-ladder" contractor to be the employer.
KRS 342 .690(1) then provides the contractor as well as to the contractor's employees,
officers, and directors with an exclusive remedy defense to potential tort liability .
General Electric Company v. Cain, 236 S .W.3d 579 (Ky. 2007), explains, however, that
the purpose of KRS 342.610(2)(b) is not to shield contractors from tort liability but to
assure that both contractors and subcontractors provide workers' compensation
coverage to their employees .
KRS 342.690(1) entitles the appellants to an exclusive remedy defense if the
Transportation Cabinet is a contractor and would have been liable for workers'
compensation benefits had the direct employer not paid them. What the trial court failed
to recognize is that KRS 342.610(2)(b) clearly describes a contractor as a "person ." For
the purposes of Chapter 342, KRS 342.0011(16) defines a "person" as being "any
individual, partnership, limited partnership, limited liability company, firm, association,
trust, joint venture, corporation, or legal representative thereof." Although the definition
may be construed as including certain governmental entities, KRS 342.630 makes it
clear that the legislature intended not to include governmental entities within the term
"person ." KRS 342.630 states as follows:
The following shall constitute employers mandatorily subject
to, and required to comply with, the provisions of this
chapter:
(1) Any person, other than one engaged solely in agriculture,
that has in this state one (1) or more employees subject to
this chapter.
(2) The state, any agency thereof, and each county, city of
any class, school district, sewer district, drainage district, tax
district, public or quasipublic corporation, or any other
political subdivision or political entity of the state that has
one (1) or more employees subject to this chapter.
KRS 342 .630 considers persons and governmental entities to be separate
classes of employers subject to Chapter 342. Although KRS 342.630 requires both
classes to provide workers' compensation coverage to direct employees,
KRS 342.610(2) considers only persons to be contractors . It does not hold a
governmental entity liable as the "up-the-ladder" employer.' Thus, KRS 342.690(1)
does not entitle a governmental entity or its employees to an exclusive remedy defense
on that basis.
The decision of the Court of Appeals is affirmed and this matter is remanded to
the Boone Circuit Court for further proceedings .
' KRS 342 .176 .085 and KRS 45A.480 require persons who contract with the state to
comply with the Workers' Compensation Act and impose fines on those who fail to do
so. Moreover, KRS 342.760 protects the employees of an uninsured employer by
placing secondary liability on the Uninsured Employers' Fund .
Lambert, C.J . ; Abramson, Cunningham, Noble and Scott, J.J . and Special
Justice Thomas Smith concur. Minton and Schroder, JJ., not sitting.
COUNSEL FOR APPELLANT RICHARD T. DAVIS :
JEFFREY C . SHIPP
KOHNEN & PATTON, LLP
211 GRANDVIEW DRIVE
SUITE 236
FT. MITCHELL, KY. 41014-2759
COLLEEN MARIE BLANDFORD
KOHNEN & PATTON, LLP
PNC CENTER STE 800
201 EAST FIFTH ST.
CINCINNATI OH 45202
COUNSEL FOR APPELLANTS S .R. HALLORAN, LARRY TRENKAMP, SAMUEL H.
BEVERAGE, PAUL S. GRAHAM, GREG KREUTZANS, AND ANDY DURBAN :
RICHARD H. DETERS
OWEN W. SEREY
P0BOX17130
COVI NGTON, KY. 41017
JEFFREY C. SHIPP
KOHNEN & PATTON, LLP
211 GRANDVIEW DRIVE
SUITE 236
FT. MITCHELL, KY. 41014-2759
COLLEEN MARIE BLANDFORD
KOHNEN & PATTON, LLP
PNC CENTER STE 800
201 EAST FIFTH ST.
CINCINNATI OH 45202
COUNSEL FOR APPELLEES PEGGY HENS LEY(CO-ADMINISTRATRIX OF THE
RICHARD SWARTZ ESTATE) AND MICHELLE SWARTZ (CO-ADMINISTRATRIX OF
THE RICHARD SWARTZ ESTATE) :
DAVID ALLEN BARBER
691 NORTH ARNOLD AVENUE
PRESTONSBURG, KY. 41653
PAULA GAY RICHARDSON
HUGHES & WILLIAMSON, P.S.C.
P0BOX1169
86 WEST MAIN STREET
OWINGSVILLE, KY. 40360
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