Indiana Supreme Court Addresses Monetary Threshold for Secondary Liability in Workers Compensation Case

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In Young v. Hood’s Gardens, Inc. 2015 Ind. LEXIS 46 (Jan. 22, 2015), the Indiana Supreme Court reversed a lower court ruling granting summary judgment to a business owner who had sought a declaration that it was not required to pay workers compensation benefits to the employee of a contractor it had hired for certain tree removal services.

Hood’s Gardens, Inc., contracted with Discount Tree Extraction to remove a tree at Hood’s place of business.  Discount orally quoted a price of $600 for the work, but, as agreed by both parties, Discount was permitted to keep the wood it removed to resell as firewood.  While completing the job, one of Discount’s workers was severely injured.

Indiana’s Worker’s Compensation Act (Indiana Code § 22-3-2-14(b)) “imposes on a person who hires a contractor without verifying that the contractor carriers worker’s compensation insurance liability to the same extent as the contractor for the injury or death of any of the contractor’s employees,” but only if the value of the work exceeds $1,000.00.  Hood’s filed a declaratory judgment action seeking to establish that it was not secondarily liable for worker’s compensation coverage for the injured worker under § 22-3-2-14(b).  The issue was whether the value of the wood the contractor received would be considered in conjunction with the price the contractor was paid for the job when determining whether the $1,000 threshold had been breached.

Noting this was an issue of first impression, the Indiana Supreme Court held that it could.  The Court stated, “the ‘value’ attributable to the performance of work that triggers secondary liability under Indiana Code § 22-3-2-14(b) includes both direct monetary payment as well as any ancillary consideration received for the work.”  Finding that a question of fact existed with regards to the value of the wood received by the contractor, the Court remanded the case for further proceedings.