THE STATE OF SOUTH CAROLINA

In The Supreme Court

Madison Glover, Plaintiff,

v.

United States of

America, Defendant.

Jim Vance, Plaintiff,

v.

United States of

America, Defendant.

United States District Court

Patrick Michael Duffy, Jr.

Opinion No. 25017

Heard March 16, 1999 - Filed November 22, 1999

CERTIFIED QUESTION ANSWERED

Gedney M. Howe, III, of Charleston, for plaintiffs.

United States Attorney J. Rene Josey, and Assistant

United States Attorney John H. Douglas, of Charleston,

for defendants.

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TOAL, A.J.: In this tort suit brought under the Federal Tort Claims Act,

the federal district court, by way of certified question, asked this Court to clarify

"statutory employer" immunity under the South Carolina Workers'

Compensation Act.

FACTUAL/PROCEDURAL BACKGROUND

The United States ("Defendant") contracted with White-Infinger Joint

Venture to perform a major construction and renovation project on a barracks

building at the Charleston Air Force Base. White-Infinger subcontracted with

Carolina Builders of Florida, the employers of plaintiffs Glover and Vance

("Plaintiffs"), to perform the roofing work on the building. Both White-Infinger

and Carolina Builders represented that they carried workers' compensation

insurance. However, Defendant neither purchased its own workers'

compensation insurance nor qualified as a self insurer under the South

Carolina Workers' Compensation Act (the "Act").

On January 9, 1995, Plaintiffs were injured when a piece of metal

flashing held by Glover came into contact with a high-voltage power line.

Plaintiffs filed claims and received workers' compensation benefits from their

direct employer. Plaintiffs also sought damages in tort from Defendant under

the Federal Tort Claims Act. Defendant moved for summary judgment, arguing

that it should be considered a "statutory employer," thus entitling it to

immunity from suit in tort under S.C. Code Ann. § 42-1-540 (1985). Before the

federal court ruled on Defendant's summary judgment motion, the South

Carolina Court of Appeals filed its decision in Harrell v. Pineland Plantation,

Inc., 329 S.C. 185, 494 S.E.2d 123 (Ct. App. 1997).

Pursuant to Rule 228, SCACR, the federal district court certified the

following question to this Court:

In light of the South Carolina Court of Appeals' decision in Harrell

v. Pineland Plantation, Inc., must an owner within the meaning of

S.C. Code § 42-1-400 have either directly purchased insurance to

cover his potential workers' compensation liabilities or have

qualified as a self-insurer (as set forth in S.C. Code § 42-5-20)

before the owner may claim immunity from suit in tort by an

injured worker of his contractor or subcontractor pursuant to the

"exclusive remedy" provisions of the Workers' Compensation Act?

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LAW/ANALYSIS

Plaintiffs argue that a statutory employer must secure the payment of

compensation in compliance with S.C. Code Ann. § 42-5-20 (1985) in order to

claim statutory immunity under the Act. We agree.

In Harrell, the Court of Appeals held that the statutory employer,

Pineland, could not claim immunity under the Act because it did not secure the

payment of compensation as required by sections 42-5-10 & -20. We have

subsequently affirmed the Court of Appeals on this point. See Harrell v.

Pineland Plantation, Op. No. 25016 (S.C. Sup. Ct. filed Nov. 22, 1999)

(Shearouse Adv. Sh. No. 35 at p. 19).

In Harrell, we noted that when the elements of S.C. Code Ann. § 42-1-400

(1985) 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. Harrell, supra; see also Parker v. Williams & Madjanik, Inc.,

275 S.C. 65, 267 S.E.2d 524 (1980). In other words, an owner is equated to an

employer for purposes of the Act. The defendant in this case, like the defendant

in Harrell, argues that a statutory employer may claim tort immunity under

S.C. Code 42-1-540 (1985), while at the same time avoiding an employer's

obligation to secure the payment of compensation as required by sections 42-5

10 & -20 of the Act. We rejected this argument in Harrell and also reject it

here.

Under the Act, the basic duty of any employer, whether it be the direct

employer or statutory employer, is the obligation to secure the payment of

compensation as prescribed by section 42-5-20. Compliance with this obligation

is the quid pro quo exacted from the employer in exchange for immunity. Thus,

a statutory employer who fails to secure the payment of compensation as

prescribed by section 42-5-20 may not claim immunity under the Act.

Moreover, prior to the enactment and amendment of S.C. Code § 42-1-415

(Supp. 1998), the fact that the immediate employer had properly secured the

payment of compensation did not remove the statutory employer's obligation

under the Act. As observed by this Court in Harrell, the Act imposed a scheme

where the owner and the immediate employer were subjected to the

requirements of the Act, and the employees received "double protection." See

Long v. Atlantic Homes, 311 S.C. 237, 428 S.E.2d 711(1993); Parker v. Williams

and Madjanik, Inc., 275 S.C. 65, 267 S.E.2d 524 (1980).

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Finally, we noted in Harrell that our conclusion on this point was

supported by the enactment and subsequent amendment of S.C. Code Ann. §

42-1-415 (Supp. 1998). Under section 42-1-415, as amended, a statutory

employer no longer needs to secure the payment of compensation to avail itself

of tort immunity under the Act, if the requirements of section 42-1-415 are met.

As in Harrell, the important implication for this case is that prior to the passage

of section 42-1-415 and its 1997 amendment, a statutory employer, in order to

claim tort immunity under the Act, was required to secure the payment of

compensation as prescribed by section 42-5-20. See Vernon v. Harleysville Mut.

Cas. Co., 244 S.C. 152, 135 S.E.2d 841(1964) (in adopting an amendment to a

statute, the legislature is presumed to have intended to make some change in

existing law).

We therefore answer the certified question in the following manner: an

owner, within the meaning of S.C. Code § 42-1-400, must comply with section

42-5-20 by either directly purchasing insurance to cover its potential workers'

compensation liabilities or qualifying as a self-insurer before the owner may

claim immunity under the Act's exclusive remedy provision.

CERTIFIED QUESTION ANSWERED

Finney, C.J., and Burnett, A.J., concur. Moore and Waller, JJ.,

dissenting in a separate opinion.

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MOORE, A.J.: I respectfully dissent. As stated in my dissent in

Harrell v. Pineland Plantation, Op. No. 25016 (S.C. Sup. Ct. filed

Nov. 22, 1999 ), I disagree with the majority's conclusion that a statutory

employer must have workers' compensation insurance at the time of the

injury in order to enjoy tort immunity under the Workers' Compensation Act.

In my opinion, this conclusion flies in the face of some basic tenets of our

workers' compensation law.

Under § 42-1-400, an "owner" 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). 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 197, 199 (1994) (Toal, A.J.)(citing 2A ARTHUR LARSON, LARSON'S

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).

Because a statutory employer is obligated under the Act to pay workers'

compensation benefits, it enjoys tort immunity under the Act irrespective of

insurance. I would answer the certified question in the negative.

Waller, AA, concurs.

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.

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