S.E. 2d
THE STATE OF SOUTH CAROLINA
In The Supreme Court
William R. Harrell, Respondent,
v.
Pineland Plantation, Ltd., Petitioner,
and
Joseph Land and Company,
Inc., Defendant.
ON WRIT OF CERTIORARI TO THE COURT OF
APPEALS
Appeal From Colleton County
L. Henry McKellar, Circuit Court Judge
Opinion No. 25016
Heard March 16, 1999 - Filed November 22, 1999
AFFIRMED IN RESULT
Bert G. Utsey, III, of Sinkler & Boyd, P.A., of Charleston,
for petitioner.
Carl E. Pierce and Joseph C. Wilson, IV, both of Hood
Law Firm, of Charleston; and John E. Parker, of Peters,
Murdaugh, Parker, Eltzroth & Detrick, P.A., of
Hampton, all for respondent.
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HARRELL v. PINELAND PLANTATION
Joseph H. McGee, of Charleston, for defendant.
TOAL, A.J.: This case involves a tort suit brought by respondent
William Harrell ("Harrell") against petitioner Pineland Plantation, Ltd. ("Pineland").
The trial court dismissed Harrell's complaint. The Court of Appeals reversed and
remanded the case for trial. Pineland appeals the decision of the Court of Appeals.
We affirm in result.
FACTUAL/PROCEDURAL BACKGROUND
Pineland is a California limited partnership. Haynes Kendall ("Kendall") is
Pineland's general partner. Pineland's only enterprise is ownership and operation
of a 275-acre plantation in Colleton County that Kendall maintains as a vacation
resort. Pineland has never realized any profit from renting the site for hunting or
recreational purposes. Kendall uses the plantation as a second home for his own
entertainment and to host non-paying friends and family. Kendall has also used
Pineland as a tax write-off.
Pineland contracted with Folk Land Management, Inc. ("Folk") to run
Pineland's daily operations and maintain the plantation. Beginning in 1990, Harrell
was the Folk employee that supervised all the work on Pineland plantation.
Harrell's duties at the plantation included supervising the maintenance of the land
and equipment, planning timber harvests, managing wildlife for hunting purposes,
and entertaining guests of the plantation. Harrell also assisted Pineland in creating
a marketingplan for the plantation. As promotion for the plantation, Harrell hosted
a non-paying travel agent at the resort. Pineland also developed a marketing
brochure and other commercial literature.
On July 23, 1993, Kendall was staying at Pineland and asked Harrell to
prepare the plantation for a party to include Kendall and his family and friends. No
paying guests would attend the party. In preparation for the evening, Harrell did
general yard-work, graded the dirt road leading to the house, and organized food
for the evening's guests. Kendall also asked Harrell to attend the party with his
wife and two children. While waiting for more guests to arrive, Kendall and Harrell
threw a baseball together and decided to accompany Harrell's and Kendall's
children in swimming in a pond on the property.
The pond on the plantation contained a rope-swing going out over the water.
Harrell used the swing several times to dive into the water. On one attempt, Harrell
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HARRELL v. PINELAND PLANTATION
fell into the pond's shallow-end and broke his neck. As a result of the accident,
Harrell is a quadriplegic with no mobility from the chest down.
Following his injury, Harrell filed a workers' compensation claim against
Folk. The parties settled the claim for $1.1 million. The Workers' Compensation
Commission approved the settlement. Harrell then brought this tort action against
Pineland alleging negligence. The trial court dismissed Harrell's complaint under
Rule 12(b) (1), SCRCP, finding that: (1) it lacked subject matter jurisdiction due to
the exclusive remedy provision of the Workers' Compensation Act (the "Act"); and
(2) Harrell could not deny his activities were under the Act because he had
previously recovered workers' compensation from Folk. Harrell appealed the
judge's rulings.
A three-judge panel of the Court of Appeals issued three separate opinions
concerning Harrell's case. See Harrell v. Pineland Plantation, Ltd., 329 S.C. 185,
494 S.E.2d 123 (Ct. App. 1997). Judge Connor wrote the lead opinion and concluded
that Pineland was not engaged as a business at the time of Harrell's injury and,
thus, could not qualify as a statutory employer. Judge Connor also found that even
if Pineland were a business, it could not qualify for the exclusivity defense because
Pineland failed to secure workers' compensation insurance or the payment of
workers' compensation as required by the Act.
Judges Cureton and Goolsby disagreed with Connor's determination that
Pineland was not operating as a business. Judge Cureton, however, agreed with
Judge Connor that due to Pineland's failure to purchase workers' compensation
insurance for itself, it was not entitled to the protection of the exclusivity provision.
In addition, Judge Cureton found that Pineland was not entitled to the exclusivity
defense because at the time of his accident, Harrell was not performing work that
was part of the "trade, business, or occupation" of Pineland.
In his dissent, Judge Goolsby found that Pineland operated as a business and
was Harrell's statutory employer. Judge Goolsby further concluded that Pineland
should have been afforded tort immunity under the Act because Folk carried
workers' compensation insurance at the time of the injury. As a result, two judges
concluded that Harrell could sue Pineland in an action at law and reversed the
rulings of the trial court. See Harrell, 329 S.C. 185, 494 S.E.2d 123. This Court
granted a writ of certiorari to consider the following issues:
1 .Was Pineland engaged in a business at the time of Harrell's accident?
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HARRELL v. PINELAND PLANTATION
2. In a statutory employment analysis, is the focus on the specific activity
of the worker at the time of an injury or on the general services and
activities performed by the subcontractor?
3. Was Pineland Harrell's statutory employer under the Act?
4. Was Pineland immune from a tort suit by Harrell due to the exclusive
remedy provision of the Workers' Compensation Act even though it did
not purchase its own Workers' Compensation coverage or otherwise
qualify as self-insured under the Act?
LAW/ANALYSIS
The determination of whether a worker is a statutory employee is
jurisdictional and therefore the question on appeal is one of law. Glass v. Dow
Chemical Co., 325 S.C. 198, 482 S.E.2d 49 (1997). As a result, this Court has the
power and duty to review the entire record and decide the jurisdictional facts in
accord with the preponderance of the evidence. Id.
1. "Statutory Employer" Status
The initial question before this Court is whether Pineland has "owner"
liability under S.C. Code Ann. 42-1-400 (1976). If so, Pineland would be deemed
Harrell's "statutory employer" and liable for workers' compensation. See Parker
v. Williams & Madjanik, Inc., 275 S.C. 65, 267 S.E.2d 524 (1980) (holding that an
owner, in effect, becomes the employee's statutory employer, even though in law the
owner is not the immediate employer of the injured worker). Section 42-1-400
provides:
When any person, in this section and 42-1-420 and 42-1-430 referred
to as "owner," undertakes to perform or execute any work which is a
part of his trade, business or occupation and contracts with any other
person (in this section and 42-1-420 to 42-1-450 referred to as
"subcontractor") for the execution or performance by or under such
subcontractor of the whole or any part of the work undertaken, by such
owner, the owner shall be liable to pay to any workman employed in
the work any compensation under this Title which he would have been
liable to pay if the workman had been immediately employed by him.
Under this section, the Court must make two determinations in assessing
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HARRELL v. PINELAND PLANTATION
whether owner workers' compensation liability will attach to Pineland: First,
Pineland must qualify as a business under the Act. Second, Harrell's work must
have constituted part of Pineland's "trade, business, or occupation."
A. Pineland as a Business
Harrell asserts that Pineland was not a business at the time of his injury and
therefore could not qualify as a statutory employer. We disagree.
Since the enactment of workers' compensation statutes, courts have given the
word business "its ordinary and popular meaning." 4 Arthur Larson, Workers'
Compensation Law 50.22 (1998). For the purposes of workers' compensation,
"[t]he test is not whether the employer is in business for profit, but whether the
employer is in business at all. If he supplies a product or service, it is inu-naterial
what he does with his profits, or whether he expects or gets any profits at all." Id.
at 50.44(a). Pineland operated as a vacation resort and provided this service to
Pineland's owner, Kendall. Folk supplied the necessary labor to run Pineland and
was responsible for entertaining the guests of the plantation, including Kendall.
Harrell's job as an employee of Folk was to run the plantation for Pineland. Even
though Pineland had not made any profit from renting to others at the time of
Harrell's injury, that fact alone does not prevent Pineland from qualifying as a
business for purposes of our workers' compensation law. Profit from the enterprise
is not a condition precedent to liability for compensation.
B. Harrell's Work as Part of Pineland's "trade, business, or
occupation"
Initially, the "trade, business, or occupation" analysis focuses on the work the
owner has employed the subcontractor to complete. See Boone v. Huntington and
Guerry Elec. Co., 311 S.C. 550, 552, 430 S.E.2d 507, 508 (1993) (" [W]hen an owner
contracts with a subcontractor to perform or execute any work which is a part of his
trade, business, or occupation, the subcontractor becomes a 'statutory employee'
of the owner for the purposes of workers' compensation liability."). Whatever the
parties contract to call their relationship is not controlling in a statutory employment
analysis. See S.C. Code Ann. 42-1-610 (1985) ("No contract or agreement, written
or implied, and no rule, regulation or other device shall in any manner operate to
relieve any employer, in whole or in part, of any obligation created by this Title
except as otherwise expressly provided in this Title."); see also Wilson v. Daniel
Intern. Corp., 260 S.C. 548,197 S.E.2d 686 (1973) (stating that the terminology used
by the parties is not controlling of their relationship).
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HARRELL v. PINELAND PLANTATION
To determine if there is a statutory employment relationship, this Court has
established three tests based on S.C. Code Ann. 42-1-400 (1976). Owners are
statutory employers for injuries related to activities that:
(1) are an important part of the trade or business of the
employer;
(2) are a necessary, essential, and integral part of the
business of the employer; or
(3) have been previously performed by employees of the employer.
Glass v. Dow Chemical Co., 325 S.C. 198, 201, 482 S.E.2d 49, 50 (1997). Owners
are treated as statutory employers in these situations because an owner should not
be able to avoid workers' compensation liability by subcontracting out the work of
their business.1
The Glass tests differentiate between work done for an owner where it would
be unfair to allow the owner to escape compensation responsibility and work
provided to the business that would be outside the policy of the statutory section.2
1 As noted by the Court in Marchbanks v. Duke Power Co., 190 S.C. 336, 343
344, 2 S.E.2d 825, 828 (1939):
It was evidently realized by the General Assembly that it would not be
fair to relieve the owner of compensation to employees doing work
which was a part of his trade or business by permitting such owner to
sub-let or sub-contract some part of said work. Doubtless in many
instances such contractor would be financially irresponsible, or the
number of employees under him would be so small, as in this case, that
such contractor would not be required under the Act to carry
compensation insurance. It was therefore, provided under the first
paragraph that where such work in which the employee was engaged
was a part of the owner's trade or business, the owner would be
responsible in compensation to all employees doing such work, whether
employees of an independent contractor or not.
2 On this point, Marchbanks offers the following illustration:
[I]f a merchant wished to construct an apartment house, the
General Assembly did not desire to hold him responsible in
compensation for injuries to employees of the contractor to whom the
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HARRELL v. PINELAND PLANTATION
In making this determination, "it is often a matter of extreme difficulty to decide
whether the work in a given case falls within the designation of the statute. It is in
each case largely a question of degree and of fact." Marchbanks, 190 S.C. at 350-51,
2 S.E.2d at 828. When the Glass analysis establishes that the subcontractor's work
for the owner was a part of the owner's trade, business, or occupation, then the,
employees of the subcontractor doing that work are the owner's statutory
employees and any injury will be reviewed for workers' compensation coverage.
Employees who work for the subcontractor but are not employed to do the work that
the owner would normally do would not have a statutory employment relationship
with the owner.
Once the determination is made that there is a statutory employment
relationship, the second step in the analysis is to treat the statutory employee as a
direct employee of the owner to determine if workers' compensation is appropriate.
In order for an employee, whether direct or statutory, to be entitled to workers'
compensation benefits, he must show that he sustained an "injury by accident
arising out of and in the course of the employment." S.C. Code Ann. 42-1-160
(085). The phrase "arising out of" in the workers' compensation statute refers to
the origin of the cause of the accident. See Bickley v. South Carolina Elec. & Gas
Co., 259 S.C. 463, 192 S.E.2d 866 (1972). "An injury arises out of employment when
there is apparent to the rational mind, upon consideration of an the circumstances,
a causal relationship between the conditions under which the work is to be
performed and the resulting injury." Owings v. Anderson County Sheriffs Dep't,
315 S.C. 297, 299, 433 S.E.2d 869, 871 (1993). This second step, the analysis of
whether the injury arises out of and in the course of the employment, is where the
focus is on the individual activity of the worker with respect to the injury.
Harrell's argument that the focus should be' solely on the activity of the
worker at the time the injury collapses our two step analysis into one. If the Court
adopted Harrell's approach, employees of a subcontractor would constantly move
in and out of workers' compensation coverage throughout the workday based on the
contract had been awarded for the construction of such an apartment
house. However, the General Assembly did intend under such
circumstances to give some measure of protection to employees of any
sub-contractor under such contractor. By the second paragraph it was
intended that where the work was not a part of the owner's trade or
business, the principal contractor would be liable in compensation to
all employees of sub-contractors doing such work.
Marchbanks, 190 S.C. at 334, 2 S.E.2d at 828.
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HARRELL v. PINELAND PLANTATION
type of work they were engaged in at that very moment.3
Turning to the facts of the instant case, we find that Pineland was Harrell's
statutory employer. As discussed above, the first step of the statutory employment
analysis involves determining if the work the owner has employed the subcontractor
to complete is "a part of his trade, business or occupation." S.C. Code Ann. 42-1
400. Focusing on the responsibilities Folk had in relation to Pineland, both the
"important part of the trade or business" test and the "necessary, essential, and
integral part of the business" test are met. Folk maintained every aspect of the
daily operations of the plantation. Without the work of Folk and Harrell, Pineland
would have had to hire direct employees to complete those duties. Their
relationship is exactly the type that the statutory employer theory is meant to cover.
See Carter v. Florentine Corp., 3 10 S.C. 228, 423 S.E.2d 112 (1992) (finding that an
absentee landlord that hired a management company to run its only property was
a statutory employer).
Harrell argues that he was not the statutory employee of Pineland because
entertaining the non-paying boss of Pineland and his friends could not meet any of
3 An owner could subcontract out all of his work, as Pineland did, and greatly
avoid any compensation responsibility. Under such an approach, a business that
uses all. subcontractors would not be liable for any workers' compensation coverage
except for those specific acts that alone would rise to the level of the Glass analysis.
The General Assembly's desire to prevent a business from avoiding the
responsibility for workers' compensation by subcontracting out the work would be
greatly frustrated by such a position. Such a rule would also exclude many workers
and employers from the Act's coverage, which is against this Court's policy. See
Baggott v. Southern Music, Inc., 330 S.C. 1, 5, 496 S.E.2d 852~ 854
(1998) (recognizing this Court's policy "to construe the Workers' Compensation Act
in favor of coverage rather than exclusion.").
For example, two employees of Folk working on the plantation are injured.
One is injured while mowing the grass. The second employee slips and fans on his
way to the bathroom during a work break. Both could recover workers'
compensation from Folk as their direct employer, but the second employee would
then be able to sue Pineland in tort because his walking to the bathroom was not "a
part of the owner's trade, business or occupation" that could meet any test set forth
in Glass. Furthermore, and an even less desirable result, Pineland would be
immune from a workers' compensation claim by the second employee, even if the
subcontractor failed to provide coverage.
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HARRELL v. PINELAND PLANTATION
the tests put forth in Glass. As discussed above, the important factor is the
relationship between the work Folk has been hired to do for Pineland and that
work's relationship to the business of Pineland. Preparing the plantation and
entertaining guests is specifically what Folk and Harrell were hired to do for
Pineland, it does not matter in this analysis that Kendall was Pineland's owner.
For an injury to be covered by the Act it must have occurred by an accident
"arising out of and in the course of the employment." S.C. Code Ann. 42-1-160
(1985). Harrell has admitted that part of his job at Folk was to entertain the guests
of Pineland, including Kendall. In light of the circumstances surrounding Harrell's
accident, his injury falls under the Act.
IL "STATUTORY EMPLOYER" IMMUNITY
Pineland argues that the Court of Appeals erred in holding that it could not
claim immunity under the Act because it did not provide any form of workers'
compensation insurance. We disagree.
When an employee and his or her employer accept the provisions of the Act,
the employee's remedies under the Act exclude all other rights and remedies of the
employee. S.C. Code Ann. 42-1-540 (1985).4This section is known as the
exclusive remedy provision, and it shrouds an employer with immunity from any
actions at law instituted by the employee. Such immunity is part of the broader
quid pro quo arrangement imposed upon the employer and employee by the Act.
The employee "receives the right to swift and sure compensation" in exchange for
giving up the right to sue in tort; the employer receives such tort immunity in
exchange for complying with those provisions of the Act that insure swift and sure
compensation for the employee. Parker v. William and Madjanik, Inc., 275 S.C.
4 Section 42-1-540 provides in pertinent part:
The rights and remedies granted by this Title to an employee when he
and his employer have accepted the provisions of this Title,
respectively, to pay and accept compensation on account of personal
injury or death by accident, shall exclude all other rights and remedies
of such employee, his personal representative, parents, dependents or
next of kin as against his employer, at common law or otherwise, on
account of such injury, loss of service or death.
S.C. Code Ann. 42-1-540 (1985).
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65, 70, 267 S.E.2d 524, 526 (1980) ("This quid pro quo approach to workmens'
compensation has worked to the advantage of society as well as the employee and
employer.").
The Act achieves such "swift and sure compensation" by requiring the
employer to secure the payment of compensation under S.C. Code Ann. 42-5-10
(1985). Section 42-5-10 provides: "Every employer who accepts the compensation
provisions of this Title shall secure the payment of compensation to his employees
in the manner provided in this chapter." S.C. Code Ann. 42-5-10. The very next
section of the Act, section 42-5-20, prescribes how an employer must secure such
compensation:
Every employer who accepts the provisions of this title relative to the
payment of compensation shall insure and keep insured his liability
thereunder in any authorized corporation, association, organization, or
mutual insurance association formed by a group of employers so
authorized or shall furnish to the commission satisfactory proof of his
financial ability to pay directly the compensation in the amount and
manner and when due as provided for in this title. The commission
may, under such rules and regulations as it may prescribe, permit two
or more employers in businesses of a similar nature to enter into
agreements to pool their liabilities under the Workers' Compensation
Law for the purpose of qualifying as self-insurers.
S.C. Code Ann. 42-5-20 (Supp. 1998).
An employer who refuses or neglects to secure such compensation becomes
liable either under the Act or in an action at law. S.C. Code Ann. 42-5-40 (1985).
Thus, an employer who fails to secure the payment of compensation as prescribed
in section 42-5-20 loses its immunity under the Act's exclusive remedy provision.
See 6 Arthur Larson, Workers' Compensation Law, 67.22 (1998) ("A common
exception to the exclusiveness of the compensation remedy is the right of suit
against an employer who fails to secure his compensation liability by taking out
insurance or qualifying as a self-insured.").
Pineland makes the argument that, as an "owner," it may avoid the obligation
of an employer to secure compensation, while at the same time retaining an
employer's tort immunity under the Act's exclusive remedy provision. The plain
language of our Act clearly does not support Pineland's position.
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As discussed above, when the elements of section 42-1-400 are satisfied, an
owner, in effect, becomes the employee's "statutory employer," even though in law
the owner is not the immediate employer of the injured worker. Parker v.
Williams & Madjanik, Inc., 275 S.C. 65, 267 S.E.2d 524 (1980); Marchbanks v.
Duke Power Co., 190 S.C. 336, 2 S.E.2d 825 (1939). In other words, an owner is
equated to an employer for purposes of the Act. This Court's first important
decision on the subject of statutory employment was Marchbanks v. Duke Power
Co., 190 S.C. 336,2 S.E.2d 825 (1939). In Marchbanks, Duke Power contracted with
an individual to paint 170 of its metal poles located around Greenville. This
individual in turn hired Marchbanks to assist in the operation. Marchbanks was
subsequently injured while painting one of the poles. He brought a suit in tort
against the owner, Duke Power. This Court held that Marchbanks' exclusive
remedy against Duke Power, as his statutory employer, was through workers'
compensation. The Court noted that Duke Power had accepted the provisions of the
Act and, with the approval of the commission, became a carrier of its own insurance
thereby securing the payment of compensation. The Court concluded that Duke
Power was entitled to tort immunity under the Act's exclusive remedy provision.
The purpose of statutory employer immunity is to protect employees of direct
employers who are financially irresponsible. Younginer v. J.A. Jones Constr. Co.,
215 S.C. 135, 54 S.E.2d 545 (1949); Marchbanks, supra. Prior to the passage of
S.C. Code Ann. 42-1-415 (Supp. 1998), discussed infra, a statutory employer had
absolute liability to pay workers' compensation benefits. Long v. Atlantic Homes,
311 S.C. 237,428 S.E.2d711 (1993). Such liability was absolute because the injured
employee could seek compensation from the statutory employer regardless whether
the direct employer could pay. Id. at 240, 428 S.E.2d at 713 ("Section 42-1-410 does
not expressly require proof of the immediate employer's failure to pay."). The
statutory employer's liability was also secondary, not because liability arose only
if the immediate employer failed to provide compensation, but because S.C. Code
Ann. 42-1-440 5 allowed for indemnity from the immediate employer. Id. The end
5 Section 42-1-440 provides in full:
When the principal contractor is liable to pay compensation under any
of 42-1-400 to 42-1-450, he shall be entitled to indemnity from any
person who would have been liable to pay compensation to the
workmen independently of such sections or from an intermediate
contractor, and have a cause of action therefor.
A principal contractor when sued by a workman of a subcontractor
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HARRELL v. PINELAND PLANTATION
result was that the owner and the immediate employer were subjected to the
requirements of the Act, and the employees received "double protection." Id. at241,
428 S.E.2d at 713 (quoting Parker, 275 S.C. at 73, 267 S.E.2d at 528).
Pineland urges this Court to adopt an interpretation of the Act that would
allow it to claim tort immunity without complying with the quintessential obligation
imposed upon it by the Act - the duty to secure the payment of compensation. To
accept Pineland's position would go against the clear mandates of the Act and
overrule this Court's prior decisions which have consistently interpreted statutory
employer liability as providing "double protection" for employees. See Long, supra;
Parker, supra.
The dissent mistakenly looks at Harrell's situation in hindsight. Denying a
tort suit against Pineland because, as it turns out, Harrell successfully recovered
some compensation from Folk ignores the policy behind requiring a statutory
employer, as well as the direct employer, to secure payment of compensation in
order to guarantee tort immunity. It is true that in this situation Harrell may
recover in both tort and in workers' compensation. However, Harrell is recovering
from two separate entities, each that owed him a responsibility to secure
compensation.
The dissent relies on section 42-5-40's statement that an employer who fails
to secure compensation becomes liable to an employee "either for compensation
under this Title or at law" in an attempt to restrict the injured employee to one
recovery under an "either/or" approach. This position ignores that Folk and
Pineland are separate entities each with the responsibility to secure compensation.
Harrell recovered workers' compensation from Folk only, not Pineland, and
Pineland failed to live up to its compensation responsibilities prior to Harrell's
accident. The dissent's position would allow the statutory employer to enjoy tort
immunity under the Act even though it has done nothing to secure the payment of
compensation to the injured worker. If Pineland had secured compensation, then
it could have recovered any compensation payments made to Harrell from Folk as
the direct employer. See S.C. Code Ann. 42-1-440 (1976).
The dissent is correct that theAct prohibits an employee from recoveringboth
workers' compensation and a tort judgment from an employer who fails to secure
compensation. Nonetheless, this case presents the obligations and rights of two
shall have the right to call in that subcontractor or any intermediate
contractor or contractors as defendant or codefendant.
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HARRELL v. PINELAND PLANTATION
separate employers. The dissent makes the statement that "nothing in the Act
entitles a claimant to recover both workers' compensation and tort judgment."
However, nothing in the Act prohibits an employee from recovering both workers'
compensation from one employer and tort damages from an upstream employer who
failed to secure compensation. In fact, as discussed above, the plain language of the
Act allows for such recovery.
Recent additions and amendments to the Act further support our holding on
this matter. In 1996, the General Assembly added S.C. Code Ann. 42-1-415 (Supp.
1998), which was later amended in 1997. Under section 42-1-415(A), a statutory
employer is no longer directly liable for workers'compensation payments whenever
documentation is presented to the commission that a contractor or subcontractor
represented himself to the statutory employer as having workers' compensation
insurance.6 Moreover, under section 42-1-415(D), a statutory employer retains any
tort immunity it had prior to the passage of this section.7 The result is that a
6 Section 42-1-415(A) provides in pertinent part:
Notwithstanding any other provision of law, upon the submission of
documentation to the commission that a contractor or subcontractor
has represented himself to a higher tier subcontractor, contractor, or
project owner as having workers'compensation insurance at the time
the contractor or subcontractor was engaged to perform work, the
higher tier subcontractor, contractor, or project owner must be relieved
of any and all liability under this title except as specifically provided in
this section. In the event that employer is uninsured, regardless of the
number of employees that employer has, the higher tier subcontractor,
contractor, project owner, or his insurance carrier shall in the first
instance pay all benefits due under this title. The higher tier
subcontractor, contractor, project owner, or his insurance carrier may
petition the commission to transfer responsibility for continuing
compensation and benefits to the Uninsured Employers'Fund....
S.C. Code Ann. 42-1-415(A) (Supp. 1998).
7 Section 42-1-415(D) provides: "However, nothing in this section shall be
construed to abrogate the immunity to tort liability of any subcontractor under this
title or any higher tier subcontractor, contractor, or project owner who may be
considered a statutory employer as provided by sections 42-1-400, 42-1-410,
42-1-420,42-1-430, and 42-1-450." S.C. Code Ann. 42-1-415(D) (Supp. 1998).
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HARRELL v. PINELAND PLANTATION
statutory employer need not secure the payment of compensation to avail itself of
tort immunity under the Act, if the requirements of section 42-1-415 are met. The
important implication forthe instant case is that priorto the passage of section 42-1
415 and its 1997 amendment, a statutory employer, in order to claim tort immunity,
was required to secure the payment of compensation as prescribed in section 42-5
20. See Vernon v. Harleysville Mut. Cas. Co., 244 S.C. 152, 135 S.E.2d 841 (1964)
(in adopting amendment to a statute, the legislature is presumed to have intended
to make some change in existing law).
We therefore hold that Pineland may not avail itself of tort immunity under
the Act's exclusive remedy provision because it failed to secure the payment of
compensation as prescribed by the Act.
CONCLUSION
Based on the foregoing, the Court of Appeals is AFFIRMED IN RESULT.
Finney, C.J., and Burnett, AA, concur. Moore and Waller, JJ.,
dissenting in a separate opinion.
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MOORE, A.J.: I disagree with the majority's conclusion that Pineland
does not have immunity because it carried no workers' compensation
insurance at the time of Harrell's injury. Accordingly, I respectfully dissent.
First, the majority concludes, and I agree, that Pineland is a statutory
employer under 42-1-400 which provides:
When any person, in this section and 44-1-420 and 42-1-430
referred to as "owner," undertakes to perform or execute any
work which is a part of his trade, business or occupation and
contracts with any other person (in this section and 42-1-420
to 42-1-450 referred to as "subcontractor") for the execution or
performance by or under such subcontractor of the whole or any
part of the work undertaken by such owner, the owner shall be
liable to -pay to any workman employed in the work an
compensation under this Title which he would have been liable
to pay if the workman had been immediately employed by him.
(emphasis added). Under 42-1-400, an 64owner" is liable as a matter of law
to pay workers' compensation benefits to its statutory employees. Parker v.
Williams and Madjanik, Inc., 275 S.C. 65, 267 S.E.2d 524, 527 (1980). As the
majority notes, a statutory employer has an "absolute liability" to pay
workers' compensation benefits. Long v. Atlantic Homes, 311 S.C. 237, 428
S.E.2d 711, 713 (1993).1 This obligation is not contingent upon whether the
owner has workers' compensation insurance.
"One who has obligations under the Act enjoys the immunities under
the Act." Freeman Mechanical, Inc. v. J.W. Bateson Co., 316 S.C. 95, 447
S.E.2d 1972 199 (1994) (Toal, A.J.)(citing 2A ARTHUR LARSON, LARSON'S
1 This absolute liability was recently modified by the enactment of S.C.
Code Ann. 42-1-415(A) (Supp. 1998) which provides for a specific exemption
to an owner's liability if the contractor or subcontractor has represented it
has workers'- compensation, unless the immediate employer is uninsured.
Section 42-1-415(D) specifically provides, however, that this section shall not
abrogate a statutory employer's tort immunity. Accordingly, the
modification to an owner's absolute liability under this section does not
impact my conclusion.
p.24
HARRELL v. PINELAND PLANTATION
WORKMEN'S COMPENSATION LAW 72.31 (1993)). The immunity granted by the
Act parallels the liability imposed by the Act. Neese v. Michelin Tire Corp..
324 S.C. 465, 478 S.E.2d 91 (Ct. App. 1996) (citing Freeman, supra).
Pineland was obligated to pay workers' compensation under the Act as
a statutory employer and therefore it enjoys tort immunity irrespective of
the existence of insurance. Here, the claimant pursued and obtained
workers' compensation from Pineland's subcontractor, Folk. As a statutory
employer, Pineland shares the tort immunity of its subcontractor regardless
of who actually paid the compensation. Parker, 267 S.E.2d at 528.
The majority attempts to support its position by applying to an owner
the statutory requirement that an employer secure the payment of
compensation under 42-5-10 and -20 in order to enjoy tort immunity under
the Act. As 42-5-40 specifically provides, however, an employer who fails to
secure compensation becomes liable to an employee "either for compensation
under this Title or at law." (emphasis added). Thus, in a situtation where
an employer is uninsured, a claimant may pursue workers' compensation or,
in the alternative, recovery in tort. Nothing in the Act entitles a claimant to
recover both workers' compensation and a tort judgment.
In conclusion, I would reverse the Court of Appeals' decision and hold
that Pineland is entitled to tort immunity as a statutory employer.
Waller, AA, concurs.
p.25