Opinion
No. 19377.
08-02-2016
Elvira R. GONZALEZ et al. v. O AND G INDUSTRIES, INC., et al.
James J. Healy, Hartford, with whom were Joel T. Faxon and, on the brief, Eric P. Smith and Jason K. Gamsby, New Haven, for the appellants (plaintiff James L. Thompson II et al.). Michael S. Lynch, with whom were Charles W. Fleischmann and, on the brief, Thomas M. McKeon, Shelton, and Kimberly A. Knox, Hartford, for the appellee (named defendant).
James J. Healy, Hartford, with whom were Joel T. Faxon and, on the brief, Eric P. Smith and Jason K. Gamsby, New Haven, for the appellants (plaintiff James L. Thompson II et al.).
Michael S. Lynch, with whom were Charles W. Fleischmann and, on the brief, Thomas M. McKeon, Shelton, and Kimberly A. Knox, Hartford, for the appellee (named defendant).
PALMER, ZARELLA, EVELEIGH, ESPINOSA, ROBINSON, VERTEFEUILLE and LAVINE, Js.
Opinion
ROBINSON, J. The sole issue in this appeal is whether a general contractor that implemented a contractor controlled insurance program (CCIP) to centralize the purchasing of workers' compensation insurance for a major project has “paid compensation benefits” to the employees of its subcontractors, thus entitling it to “principal employer” immunity under General Statutes § 31–291 from further claims by those employees. The plaintiffs, James L. Thompson II, Carol M. Thompson, and James McVay, seek to recover damages resulting from the alleged negligence of the named defendant, O & G Industries, Inc. The plaintiffs appeal from the trial court's grant of the defendant's motion for summary judgment with respect to their tort claims. On appeal, the plaintiffs claim that the trial court improperly concluded that the defendant had “paid compensation benefits” on the basis of an incorrect interpretation of that term as used in § 31–291. We agree with the plaintiffs' claim that the trial court improperly interpreted the term “paid compensation benefits” in § 31–291, but further conclude that, even under the proper construction of the statute, no genuine issue of material fact exists as to whether the defendant paid compensation benefits to Thompson and McVay. Accordingly, we affirm the judgment of the trial court.
General Statutes § 31–291 provides: “When any principal employer procures any work to be done wholly or in part for him by a contractor, or through him by a subcontractor, and the work so procured to be done is a part or process in the trade or business of such principal employer, and is performed in, on or about premises under his control, such principal employer shall be liable to pay all compensation under this chapter to the same extent as if the work were done without the intervention of such contractor or subcontractor. The provisions of this section shall not extend immunity to any principal employer from a civil action brought by an injured employee or his dependent under the provisions of section 31–293 to recover damages resulting from personal injury or wrongful death occurring on or after May 28, 1988, unless such principal employer has paid compensation benefits under this chapter to such injured employee or his dependent for the injury or death which is the subject of the action.”
We note that the present case was commenced on March 10, 2011, by the following plaintiffs: Elvira R. Gonzalez, James L. Thompson II, Carol M. Thompson, Robert Edwards, Dorry Edwards, Ned Remondi, Laurie Remondi, Salvatore Candelora, Debra Candelora, Wayne Bosquet, and Oluf Olsen. On September 23, 2013, the trial court issued an order realigning the parties in the present case pursuant to General Statutes § 52–108 and Practice Book § 9–19. Specifically, the trial court ordered the addition of James McVay as a plaintiff and the removal of all of the original plaintiffs with the exception of James L. Thompson II and Carol M. Thompson. In the interest of simplicity, we collectively refer to these three individuals as the plaintiffs.
We further note that the sole count of the operative complaint pertaining to Carol M. Thompson alleges loss of consortium, a claim that is derivative of the negligence and strict liability claims alleged by her husband, James L. Thompson II. See, e.g., Hopson v. St. Mary's Hospital, 176 Conn. 485, 494, 408 A.2d 260 (1979). Unless otherwise noted, all references to Thompson hereinafter are to James L. Thompson II.
The following additional parties have been named as defendants in the present case: Keystone Construction & Maintenance Services, Inc.; Kleen Energy Systems, LLC; Bluewater Energy Solutions, Inc.; Power Plant Management Services, LLC; WorleyParsons Group, Inc.; Spectra Energy Operating Company, LLC; and Siemens Energy, Inc. None of these additional defendants are, however, involved in the present appeal. In the interest of simplicity, all references to the defendant hereinafter are to O & G Industries, Inc.
We transferred the appeal to this court pursuant to General Statutes § 51–199(c) and Practice Book § 65–1.
The record reveals the following undisputed facts and procedural history. In 2009, the defendant served as the general contractor for the construction of a gas fired power plant in Middletown. The defendant hired a subcontractor, United Anco Services, Inc. (United Anco), to assemble scaffolding at the site. Thompson was an employee of United Anco. The defendant hired a second subcontractor, Ducci Electrical Contractors, Inc. (Ducci Electrical), to perform inspection and testing of instrumentation. Ducci Electrical, in turn, hired a third subcontractor, Instrument Sciences and Technologies, Inc. (Instrument Sciences), to perform the instrumentation and control work. McVay was an employee of Instrument Sciences.
Both United Anco and Ducci Electrical agreed to the standard subcontract used by the defendant. The defendant's standard subcontract required all bidders to include, as a line item in their bids, their insurance costs to complete their work. The subcontractors would calculate these costs using their individual insurance rates and anticipated payroll, plus allowances for any overhead and profit. The standard subcontract stated, however, that the defendant “may” elect to implement a CCIP to “centralize the purchasing of insurance” for the project. This “consolidated purchasing of insurance” would include, inter alia, workers' compensation insurance for the defendant and all tiers of subcontractors. If the defendant opted to implement a CCIP, participation in the program would be “mandatory,” and, after enrolling in the program, each subcontractor would be relieved of its contractual duty to provide workers' compensation insurance. The defendant would then use a change order process to reduce the price of each subcontract by the amount identified for the subcontractor's insurance costs.
The defendant subsequently implemented a CCIP, which provided workers' compensation coverage for itself and all enrolled subcontractors through policies issued by the Old Republic General Insurance Corporation (Old Republic). Both United Anco and Instrument Sciences enrolled in the program, and each received individual insurance policies in their names. As the “[s]ponsor” of the program, the defendant was solely responsible for paying the premiums for its own coverage and that of all enrolled subcontractors. The defendant subsequently paid a premium in the amount of $1,150,465 for workers' compensation coverage provided under the CCIP.
As of February 7, 2010, the defendant's CCIP provided workers' compensation coverage for approximately eighty-five enrolled subcontractors.
Thereafter, the defendant issued change orders deducting the insurance costs specified in the bids from United Anco and Ducci Electrical from their respective subcontracts. Ducci Electrical, in turn, issued a corresponding change order to its subcontract with Instrument Sciences, reducing it by the amount equal to Instrument Sciences' insurance costs. Over approximately the next eighteen months, the payrolls of United Anco, Ducci Electrical, and Instrument Sciences increased due to certain demands necessary to complete the power plant project. According to the CCIP Insurance Manual (manual), if a subcontractor's payroll increased, the subcontractor would issue a change order to the subcontract accounting for the additional labor, including the cost the subcontractor would have incurred to provide its own insurance for that labor, had a CCIP not been in place. This amount would represent the amount that would have been included in the subcontractor's original bid. The defendant would then issue its own change order to the subcontract to reduce it by the subcontractor's increased insurance costs, because it now provided insurance to all of the subcontractor's employees through the CCIP. During that time period, the defendant issued several additional change orders to its subcontract with United Anco to account for its increased payroll and insurance costs. On February 7, 2010, an explosion occurred at the power plant construction site, injuring Thompson and McVay. Under the terms of the CCIP, the defendant was required to pay a $250,000 deductible in the event that workers' compensation benefits were to be paid. The defendant paid this deductible to Old Republic, along with a claim handling fee in the amount of $17,500 to administer workers' compensation benefits. Both of these payments were made to Old Republic by checks drawn on the defendant's account. Thompson and McVay subsequently applied for and received workers' compensation benefits under the CCIP, including medical expenses and lost wages.
We note that, although the record does not appear to include the change order between the defendant and Ducci Electrical, the existence of that transaction is supported by the deposition testimony of Daniel Cretella, the defendant's financial analyst.
The manual “[g]enerally describes the structure of the CCIP,” “[i]dentifies responsibilities of the various parties involved in the [p]roject,” “[p]rovides a basic description of CCIP coverage,” “[d]escribes audit and administrative procedures,” and “[p]rovides answers to basic questions about the CCIP.” Daniel Cretella, the defendant's financial analyst, testified at his deposition in this case that the manual should have been provided to all enrolled subcontractors.
The defendant's apparent purpose in monitoring the subcontractors' costs to procure their own insurance, after the CCIP was implemented, was to establish the “[v]erified [b]lended [p]ayroll [r]ate” for the CCIP. Additionally, the defendant “reserve[d] the right to terminate or modify the CCIP” at any time. In the event that the defendant terminated the CCIP, the manual stated that the defendant “may require the subcontractors to procure and maintain [alternative] insurance coverage.” Thus, the defendant may have wished to monitor the subcontractors' normal insurance costs to complete their work as necessary information in the event it decided to terminate the CCIP.
Other than the defendant's first change order to United Anco's subcontract, which deducted the insurance costs specified in United Anco's original bid, only one other change order appears in the record on appeal. This change order, numbered sixteen, deducts $786,726 from United Anco's subcontract for its “[i]nsurance [p]remium.” The order states that $1,156,604 represents United Anco's “total insurance premium cost,” and that because $369,878 had already been deducted from the subcontract through previous change orders, an additional $786,726 would be deducted from the contract. Instrument Sciences' payrolls and insurance costs also apparently increased during the course of the project, but additional change orders between Ducci Electrical and Instrument Sciences are not contained within the record.
The plaintiffs ask us to take judicial notice of several postjudgment filings in the present case concerning the cause of the explosion. The plaintiffs originally referenced these filings in their brief and included them in their appendix. We subsequently granted the defendant's motion to strike those filings from the record and the corresponding references in the brief. Accordingly, we decline to take judicial notice of these filings because they are irrelevant to the issue before this court. See Drabik v. East Lyme, 234 Conn. 390, 398, 662 A.2d 118 (1995) (“[j]udicial notice ... meets the objective of establishing facts to which the offer of evidence would normally be directed” [internal quotation marks omitted] ); cf. State v. Gaines, 257 Conn. 695, 705 and n. 7, 778 A.2d 919 (2001) (taking judicial notice of transcript relevant to issue of whether defense attorney had conflict of interest); Karp v. Urban Redevelopment Commission, 162 Conn. 525, 527, 294 A.2d 633 (1972) (taking judicial notice of filing relevant to issue of whether trial court had jurisdiction over case).
As of October 17, 2013, Thompson had received $104,035 in workers' compensation benefits paid by Old Republic, and McVay had received $6489 in benefits. Although Old Republic technically paid these benefits to Thompson and McVay, it did so in accordance with the workers' compensation insurance policies purchased by the defendant. In discussing the requirement that the principal employer “pa[y] [workers'] compensation benefits” to obtain immunity, the legislature did not appear to distinguish between benefits paid directly by the principal employer or by an insurance company pursuant to a policy purchased by the principal employer. When asked whether a principal employer that purchases workers' compensation insurance for its subcontractors would be immune from civil actions, one representative answered, “You're absolutely right.... If the principal employer or general contractor wanted to go out and buy workers' compensation insurance for [its] subcontractors' employees at the premiums they are today, so be it. I guess he could. And once he paid those benefits, yes, he would be immune because he's in fact the person paying the workers' comp [ensation ] benefits. ” (Emphasis added.) 31 H.R. Proc., Pt. 11, 1988 Sess., p. 3729, remarks of Representative Adamo. Thus, it may be said that the defendant paid workers' compensation benefits to Thompson and McVay by purchasing workers' compensation insurance policies from Old Republic. See Bishel v. Connecticut Yankee Atomic Power Co., 62 Conn.App. 537, 539–41, 771 A.2d 252 (granting summary judgment in favor of principal employer under § 31–291 when insurance company paid workers' compensation benefits to injured employees pursuant to owner controlled insurance program funded by principal employer), cert. denied, 256 Conn. 915, 773 A.2d 943 (2001).
The plaintiffs brought the present action against the defendant under General Statutes § 31–293(a), asserting, inter alia, negligence and strict liability claims in connection with injuries caused by the explosion. The defendant moved for summary judgment on these claims, arguing that it was immune from civil actions under § 31–291 because it was a “principal employer” that had paid workers' compensation benefits to Thompson and McVay. The plaintiffs did not challenge the defendant's status as a principal employer, but asserted that a genuine issue of material fact existed as to whether the defendant had “paid” workers' compensation benefits. In particular, the plaintiffs argued that, although the defendant sponsored a CCIP and paid the premium under the policies, it was the subcontractors that had actually paid the benefits, because the defendant effectively shifted the cost of the premium to its subcontractors by issuing change orders in the amount of each subcontractor's insurance costs. The plaintiffs further argued that § 31–291 requires a principal employer to demonstrate that it paid for “all or the entirety” of the workers' compensation benefits to an injured employee, and that the defendant had not done so.
General Statutes § 31–293(a) provides in relevant part: “When any injury for which compensation is payable under the provisions of this chapter has been sustained under circumstances creating in a person other than an employer who has complied with the requirements of subsection (b) of section 31–284, a legal liability to pay damages for the injury, the injured employee may claim compensation under the provisions of this chapter, but the payment or award of compensation shall not affect the claim or right of action of the injured employee against such person, but the injured employee may proceed at law against such person to recover damages for the injury....”
We note that, although § 31–293(a) was amended by our legislature after the commencement of the present case; see Public Acts 2011, No. 11–205, § 1; that amendment has no bearing on the merits of this appeal. In the interest of simplicity, we refer to the current revision of the statute.
The trial court granted the defendant's motion for summary judgment. In its memorandum of decision, the trial court first concluded that the plain and unambiguous meaning of the word “paid” as used in § 31–291 is “simply to transfer money.” As such, because it was undisputed that the defendant had paid the premium, deductible, and other costs for the CCIP, the trial court concluded that no genuine issue of material fact existed as to whether the defendant “paid” workers' compensation benefits to Thompson and McVay. In essence, the trial court determined that the factual dispute about whether the subcontractors reimbursed the defendant for the costs of the CCIP through the change order process was not material to whether the defendant had paid the benefits. The trial court further concluded that § 31–291 does not require a principal employer to prove that it paid all of the workers' compensation benefits to an injured employee in order to obtain immunity. Accordingly, the trial court granted summary judgment in favor of the defendant on the plaintiffs' claims. This appeal followed.
On appeal, the plaintiffs claim that the trial court improperly interpreted the term “paid compensation benefits” in § 31–291, and that, under the proper construction, a genuine issue of material fact exists as to whether the defendant paid such benefits. The plaintiffs contend that the trial court adopted an unduly narrow definition of the word “paid” as “simply to transfer money,” and that the plain and unambiguous meaning of “paid” is to bear a cost. Alternatively, the plaintiffs argue that the word “paid” is ambiguous, and that the legislative history and purpose of § 31–291 supports their definition. The plaintiffs also reiterate their claim that the defendant was required to prove that it paid all of their benefits to obtain immunity under § 31–291. According to the plaintiffs, this interpretation of § 31–291 yields a genuine issue of material fact as to whether the defendant paid, namely, bore the entire cost of, the workers' compensation benefits provided to Thompson and McVay.
In response, the defendant contends that the trial court properly interpreted the term “paid compensation benefits” in § 31–291, but posits that, under either interpretation, it paid such benefits. The defendant argues that the trial court correctly determined that the plain and unambiguous meaning of “paid” is “simply to transfer money.” Even under the plaintiffs' definition, however, the defendant argues that it “paid” workers' compensation benefits to Thompson and McVay because it bore the costs of the CCIP and did not pass those costs on to its subcontractors through the change order process. The defendant maintains that it simply eliminated the subcontractors' costs to provide their own insurance for the project, which they no longer incurred after enrolling in the CCIP. We conclude that, although § 31–291 requires a principal employer to bear the costs of all of the injured employees' benefits to be entitled to immunity, there nevertheless is no genuine issue of material fact as to whether the defendant bore all of those costs in this case.
“At the outset, we set forth the applicable standard of review. [T]he standard of review of a trial court's decision to grant a motion for summary judgment is well established. Practice Book [§ 17–49 ] provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.... Our review of the trial court's decision to grant [a] motion for summary judgment is plenary.” (Internal quotation marks omitted.) Doe v. Norwich Roman Catholic Diocesan Corp., 279 Conn. 207, 211, 901 A.2d 673 (2006). “The issue before this court involves a question of statutory interpretation that also requires our plenary review.” (Internal quotation marks omitted.) Id., at 212, 901 A.2d 673.
To determine whether the defendant “paid compensation benefits” to the plaintiffs, we must first discern the proper meaning of that term under § 31–291. Specifically, we first consider whether the word “paid” is properly defined, as urged by the plaintiffs, as to “bear a cost” or, as argued by the defendant, “simply to transfer money.” We next determine whether the term “paid compensation benefits” requires a principal employer to prove that it paid all of the injured employees' workers' compensation benefits to obtain statutory immunity under § 31–291.
“When construing a statute, [o]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature.... In other words, we seek to determine, in a reasoned manner, the meaning of the statutory language as applied to the facts of [the] case, including the question of whether the language actually does apply.... In seeking to determine that meaning, General Statutes § 1–2z directs us first to consider the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered.... When a statute is not plain and unambiguous, we also look for interpretive guidance to the legislative history and circumstances surrounding its enactment, to the legislative policy it was designed to implement, and to its relationship to existing legislation and common law principles governing the same general subject matter.... The test to determine ambiguity is whether the statute, when read in context, is susceptible to more than one reasonable interpretation.” (Citation omitted; internal quotation marks omitted.) Doe v. Norwich Roman Catholic Diocesan Corp., supra, 279 Conn. at 212, 901 A.2d 673.
In accordance with § 1–2z, we begin our analysis with the text of the statute. Section 31–291 provides in relevant part: “When any principal employer procures any work to be done wholly or in part for him by a contractor, or through him by a subcontractor ... such principal employer shall be liable to pay all compensation under this chapter to the same extent as if the work were done without the intervention of such contractor or subcontractor. The provisions of this section shall not extend immunity to any principal employer from a civil action brought by an injured employee ... under the provisions of section 31–293 to recover damages resulting from personal injury ... unless such principal employer has paid compensation benefits ... to such injured employee....” (Emphasis added.)
The first sentence of § 31–291 embodies the “principal employer doctrine,” under which an employer that hires a contractor or subcontractor, and meets the statutory definition of a “principal employer,” is liable to pay workers' compensation benefits to the injured employees of those contractors or subcontractors. Pelletier v. Sordoni/Skanska Construction Co., 264 Conn. 509, 518–19, 825 A.2d 72 (2003). Furthermore, if the principal employer actually pays those benefits, according to the second sentence of § 31–291, it enjoys immunity from further claims by the injured employees brought under § 31–293. The word “paid” is, however, not defined in § 31–291. Section 31–291 does specify, however, that the principal employer must have paid the benefits to the injured employee to obtain immunity, rather than merely stating in the abstract that the employee must be paid benefits, which appears to support the plaintiffs' definition of the word “paid” as a cost borne by the principal employer. In isolation, however, the plain language of § 31–291 provides no further insight into the meaning of this word.
The three conditions that must exist for a contractor to qualify as a principal employer are: “(1) the relation of principal employer and contractor must exist in work wholly or in part for the former; (2) the work must be on or about premises controlled by the principal employer; [and] (3) the work must be a part or process in the trade or business of the principal employer.” (Internal quotation marks omitted.) Gigliotti v. United Illuminating Co., 151 Conn. 114, 118, 193 A.2d 718 (1963).
We next examine the text of § 31–291 within the greater framework of the Workers' Compensation Act (act), General Statutes § 31–275 et seq. See Doe v. Norwich Roman Catholic Diocesan Corp., supra, 279 Conn. at 212, 901 A.2d 673. The purpose of the act is “to provide compensation for injuries arising out of and in the course of employment, regardless of fault.... Under the statute, the employee surrenders his right to bring a common law action against the employer, thereby limiting the employer's liability to the statutory amount.... In return, the employee is compensated for his or her losses without having to prove liability.” (Internal quotation marks omitted.) Rettig v. Woodbridge, 304 Conn. 462, 473, 41 A.3d 267 (2012) ; see also General Statutes § 31–284(a). The words “paid” and “pay” appear in relation to compensation in several sections of the act, but the act does not define those words. See, e.g., General Statutes §§ 31–275(I)(A)(iii), 31–293(b) and 31–306(b) ( “paid”); General Statutes §§ 31–294c (b), 31–352 and 31–355(b) ( “pay”).
General Statutes § 31–284(a) provides in relevant part: “An employer who complies with the requirements of subsection (b) of this section shall not be liable for any action for damages on account of personal injury sustained by an employee arising out of and in the course of his employment ... but an employer shall secure compensation for his employees as provided under this chapter....”
Similarly, the general definitions statute, General Statutes § 1–1, also does not define the words “pay” or “paid.”
In accordance with General Statutes § 1–1(a), we, therefore, look to the common usage of the word “paid” to discern the definition intended by the legislature in § 31–291. See, e.g., Potvin v. Lincoln Service & Equipment Co., 298 Conn. 620, 633, 6 A.3d 60 (2010). “To ascertain that usage, we look to the dictionary definition of the term.” (Internal quotation marks omitted.) Id. Merriam–Webster's Collegiate Dictionary (11th Ed.2003) defines “pay” as “to make due return to for services rendered or property delivered,” “to engage for money,” or “to make a disposal or transfer of ... money....” Likewise, the American Heritage College Dictionary (4th Ed.2007) defines “pay” as “to give ... money ... in exchange for goods or services” or “to bear a ... cost ... in recompense.”
We note that the common usage of the word “pay” has not changed since the legislature enacted § 31–291, rendering reliance on current definitions instructive for the purpose of statutory interpretation. See State v. Menditto, 315 Conn. 861, 866, 110 A.3d 410 (2015) (“[b]ecause we seek to discern the intent of the legislature [at the time of enactment], dictionaries in print at that time are especially instructive”). Specifically, the Random House Dictionary (2d Ed.1987) defines “pay” as “to give over (a certain amount of money) in exchange for something” and “to transfer money ... as in making a purchase....”
We conclude that the term “paid compensation benefits,” as used in § 31–291, is ambiguous. Given the fact that the dictionary definitions of “pay” include both “to make a disposal or transfer of ... money”; Merriam–Webster's Collegiate Dictionary, supra; and “to bear a ... cost”; American Heritage College Dictionary, supra; the definitions asserted by the plaintiffs and the defendant are reasonable. Specifically, in the context of § 31–291, the legislature may reasonably have intended that the principal employer advance workers' compensation benefits, allowing the principal employer to be reimbursed later by subcontractors or other involved parties. The legislature could also reasonably have intended, however, that the principal employer shoulder the financial burden of the benefits in exchange for immunity from further claims by the injured employees. When § 31–291 is read in the context of the act, the word “paid” is therefore susceptible to more than one reasonable interpretation. See Doe v. Norwich Roman Catholic Diocesan Corp., supra, 279 Conn. at 212, 901 A.2d 673 ; see also, e.g., Chase National Bank of New York v. Schleussner, 117 Conn. 370, 167 A. 808 (1933) ( “pay” primarily refers to “satisfaction made in money,” but may also mean “to transfer”).
The differences in the parties' proposed definitions may be illustrated with the following hypothetical example: A and B go to lunch and A pays for lunch with his credit card. Later, B reimburses A for his portion of the lunch in cash. Who has “paid” for B's lunch? Under the plaintiffs' definition, B has paid for his own lunch. Under the defendant's definition, A has paid for B's lunch, regardless of the fact that B later reimbursed A for the lunch.
We note that similar ambiguities have been considered in other states. See Everett v. State Farm Indemnity Co., 358 N.J.Super. 400, 407, 818 A.2d 372 (2002) (considering whether “payment of benefits” referred exclusively to monetary payment by insurance company to insured, or might also include credit against deductible or co-payment), aff'd, 175 N.J. 567, 818 A.2d 319 (2003) ; Beaver v. Liston, 76 Pa.Cmwlth. 619, 623, 464 A.2d 679 (1983) (“ ‘[p]ay’ is a broad, general term lacking particular meaning and encompassing myriad forms of remuneration”).
We therefore look to the legislative history of § 31–291 and the circumstances surrounding its enactment for further guidance. See, e.g., Doe v. Norwich Roman Catholic Diocesan Corp., supra, 279 Conn. at 212, 901 A.2d 673. Moreover, in interpreting the language of § 31–291, “we do not write on a clean slate, but are bound by our previous judicial interpretations of the language and the purpose of the statute.” Kasica v. Columbia, 309 Conn. 85, 93–94, 70 A.3d 1 (2013). We have previously stated that the purpose of the principal employer provision in § 31–291 is “to afford full protection to work[ers], by preventing the possibility of defeating the [act] by hiring irresponsible contractors or subcontractors to carry on a part of the [principal] employer's work.” (Internal quotation marks omitted.) Pelletier v. Sordoni/Skanska Construction Co., supra, 264 Conn. at 520, 825 A.2d 72.
The principal employer provision has been part of the act since its enactment in 1913. Id., at 519, 825 A.2d 72. Prior to 1988, however, § 31–291 did not require the contractor to actually pay workers' compensation benefits to the injured employees in order to obtain immunity. Id., at 521–22, 825 A.2d 72. So long as the employer was a principal employer—and, thus, was liable to pay the benefits—the employer enjoyed immunity from civil actions regardless of whether it actually paid those benefits. Id. This liability for benefits was “wholly theoretical,” however. 31 H.R. Proc., Pt. 11, 1988 Sess., p. 3717, remarks of Representative Adamo. “Because of the certificates of insurance required of the subcontractors and ... the benefits provided by the second injury fund ... the principal employer was rarely called upon actually to pay th[e] benefits.” (Footnote added.) Pelletier v. Sordoni/Skanska Construction Co., supra, 264 Conn. at 522, 825 A.2d 72. Principal employers therefore enjoyed an immunity from civil actions “for which they exchanged very little, if any-thing.” Id.
Pursuant to General Statutes § 31–355, the second injury fund provides, inter alia, workers' compensation benefits to injured employees when their employers and their employers' insurers fail to pay such benefits. See, e.g., Dechio v. Raymark Industries, Inc., 114 Conn.App. 58, 60, 968 A.2d 450 (2009) (discussing history and purpose of second injury fund), aff'd, 299 Conn. 376, 10 A.3d 20 (2010).
In 1988, in recognition of this “inequitable situation”; 31 S. Proc., Pt. 8, 1988 Sess., p. 2703, remarks of Senator Spellman; the legislature amended § 31–291 to require principal employers to actually pay workers' compensation benefits in order to obtain the statutory immunity from civil actions. Pelletier v. Sordoni/Skanska Construction Co., supra, 264 Conn. at 522–26, 825 A.2d 72. Legislators acknowledged that under the then current law, “the principal employer received an immunity for which [it] did not provide any benefit....” 31 S. Proc., supra, at p. 2704, remarks of Senator Spellman. As one representative put it, “[t]he problem ... [was] that the principal employer [could receive] immunity from [an action] by an injured worker, even when that principal employer pa[id] that worker nothing at all.” 31 H.R. Proc., supra, at p. 3716, remarks of Representative Adamo. Likewise, one senator noted that “the situations in which [a] principal employer would ever be paying workers' compensation benefits became few and far between. Yet, they continued to enjoy the immunity.” 31 S. Proc., supra, at p. 2704, remarks of Senator Spellman. A legislators characterized this immunity as “false” and “foolish”; 31 H.R. Proc., supra, at pp. 3741–46, remarks of Representative Adamo; and recognized that it created a “grossly unfair” and “particularly outrageous” situation. Id., at pp. 3716–17, remarks of Representative Adamo. By adding the second sentence to § 31–291, the legislature sought to prevent principal employers from “get[ting] a free ride”; id., at p. 3743, remarks of Representative Eugene Migliaro; and “hiding behind an immunity and not paying a single dime.” Id., at p. 3743, remarks of Representative Adamo. Thus, “[t]he purpose and effect of this amendment was to limit the implied common-law immunity of the principal employer to the situation in which it had in fact paid the workers' compensation benefits that presumably were the basis of its immunity. Implicit in this amendment, moreover, was the notion that, except in the isolated cases of its application, there would be no such immunity. ” (Emphasis added.) Pelletier v. Sordoni/Skanska Construction Co., supra, at 525, 825 A.2d 72. On the basis of this legislative history, we conclude that the legislature intended the word “paid” in § 31–291 to mean bear a cost, rather than simply transfer money. Legislators who supported adding this language to § 31–291 continually expressed concern with the lack of an even exchange for the principal employer's immunity from civil actions. It follows that, when the legislature stated that the principal employer must have “paid compensation benefits” to obtain immunity, it meant that the principal employer must shoulder the financial burden of those benefits, rather than pass that responsibility on to its subcontractors or the second injury fund. Otherwise, the “false” and “foolish” immunity that prompted the addition of this requirement to § 31–291 could continue. 31 H.R. Proc., supra, at pp. 3741–46, remarks of Representative Adamo. Indeed, under the defendant's definition of the word “paid,” principal employers could purchase workers' compensation insurance, seek direct reimbursement from their contractors or subcontractors, and incur no cost at all in “exchange” for their immunity from claims by the injured employees of those contractors or subcontractors. Pelletier v. Sordoni/Skanska Construction Co., supra, 264 Conn. at 522, 825 A.2d 72. This situation would, in reality, be no different from the “unbelievably unfair” situation that led to the 1988 amendment of § 31–291. 31 H.R. Proc., supra, at p. 3717, remarks of Representative Adamo. Indeed, it would render that amendment superfluous, and we presume that the legislature does not intend to enact meaningless legislation. See, e.g., In re Bachand, 306 Conn. 37, 54, 49 A.3d 166 (2012).
This is not to say, however, that a principal employer cannot account for the cost of providing workers' compensation insurance through a CCIP for its contractors and subcontractors in its own bids for a project. We recognize that, ultimately, the owner of the project “bears the cost” for all of the workers' compensation insurance for the project. Indeed, a principal employer must pass these costs on to the owner in order to make a profit on the project. We simply hold that a principal employer cannot pass these costs on to its contractors or subcontractors, or the second injury fund, and receive the statutory immunity under to § 31–291.
Likewise, in the absence of a CCIP, subcontractors may include their costs to provide workers' compensation insurance for their employees in their bids to the general contractor, who would include such costs in its bid to the owner, and so on. Even though the general contractor and, ultimately, the owner of the project, “bear the cost” of such insurance, the subcontractor paid for the insurance in the first instance. As such, the subcontractor would be immune from claims by its own employees. The general contractor would not, however, enjoy such immunity. We agree with the trial court that “the common usage of the word ‘paid’ does not contemplate an accounting of debits and credits and an economic analysis as to which party has in fact incurred a permanent change in financial position as a result of a transaction.”
In the same vein, the legislative history of § 31–291 leads us to conclude further that the principal employer must pay all, not merely some, of the injured employees' workers' compensation benefits in order to receive the statutory immunity. Thus, we disagree with the trial court's interpretation to the contrary, which was based on the legislature's use of the word “all” in the first sentence of § 31–291, concerning the employer's liability to pay workers' compensation benefits, and not the second sentence, concerning the employer's immunity for paying such benefits. Although the absence of a word in a portion of a statute is surely significant in interpreting the statute; see Viera v. Cohen, 283 Conn. 412, 431, 927 A.2d 843 (2007) (“[t]ypically, the omission of a word otherwise used in the statutes suggests that the legislature intended a different meaning for the alternat[ive] term”); we cannot interpret § 31–291 in a manner that allows principal employers to pay only some benefits to receive immunity, because doing so would create a loophole in the statute that subverts the expressed intent of the legislature. “The principles of statutory construction ... require us to construe a statute in a manner that will not thwart its intended purpose or lead to absurd results.” (Internal quotation marks omitted.) Coppola v. Coppola, 243 Conn. 657, 665, 707 A.2d 281 (1998). Under the trial court's interpretation of § 31–291, as advanced by the defendant, principal employers could pay a mere pittance of the injured employees' workers' compensation benefits and still obtain complete immunity from claims by those employees. Principal employers could also seek direct reimbursement from their contractors or subcontractors for nearly all of the cost of the benefits. Like the “outrageous” situation that existed prior to 1988; 31 H.R. Proc., supra, at p. 3717, remarks of Representative Adamo; principal employers would therefore exchange “very little” for their immunity. Pelletier v. Sordoni/Skanska Construction Co., supra, 264 Conn. at 522, 825 A.2d 72. Such a construction of § 31–291 would also undermine the legislature's intent to limit the instances of principal employer immunity to “isolated” cases. Id., at 525, 825 A.2d 72. Accordingly, we conclude that the term “paid compensation benefits” in § 31–291 requires a principal employer to demonstrate that it bore the cost of all of the workers' compensation benefits to an injured employee in order to obtain statutory immunity from civil actions.
Indeed, we note that the trial court's interpretation of § 31–291 on this point conflicts with other Superior Court decisions on the subject. See, e.g., Gall v. Smith, Superior Court, judicial district of New Haven, Docket No. CV–99–0433624–S, 2002 WL 1370679 (May 21, 2002) (denying summary judgment in favor of principal employer on basis of immunity under § 31–291 because issue of fact existed as to whether employer “paid all of the workers' compensation benefits” to which deceased employee's estate and his dependents were entitled); Barry v. Ninth Square Project, Superior Court, judicial district of New Haven, Docket No. CV–96–0385898–S, 1999 WL 195893 (March 26, 1999) (denying principal employer's motion for summary judgment pursuant to § 31–291 because, although employer submitted evidence showing “payment of a portion of the [workers'] compensation premium,” employer “fail[ed] to demonstrate that [it] paid the entire workers' compensation premium”).
Moreover, if we were to hold that principal employers could pay only some of the injured employees' workers' compensation benefits to obtain immunity, it would be unclear at what point the principal employer had paid enough benefits to receive immunity. In the absence of specific legislative language to this effect, we cannot condone the adoption of such a seemingly unworkable standard by judicial act. See Benvenuto v. Mahajan, 245 Conn. 495, 501, 715 A.2d 743 (1998) (“it is more efficient, for the courts and the parties, to have a bright line rule because a case-by-case approach.... promotes, rather than eliminates, uncertainty” [internal quotation marks omitted] ); see also Durniak v. August Winter & Sons, Inc., 222 Conn. 775, 781, 610 A.2d 1277 (1992) (“We have repeatedly observed that our act represents a complex and comprehensive statutory scheme balancing the rights and claims of the employer and the employee arising out of work-related personal injuries. Because of the comprehensive nature of the act, the responsibility for carving out exceptions from any one of its provisions belongs to the legislature and not to the courts.”).
Applying this construction of § 31–291 to the present case, we next determine whether there is a genuine issue of material fact with respect to whether the defendant paid, i.e. bore the cost of, all of the workers' compensation benefits to Thompson and McVay, thus entitling it to immunity under § 31–291. As noted previously, it is undisputed that the defendant paid the $1,150,465 premium for the workers' compensation coverage provided to United Anco, Instrument Sciences, and dozens of other subcontractors under the CCIP. It is also undisputed that the defendant paid a $250,000 deductible under the CCIP and a $17,500 claim handling fee to administer the benefits provided to Thompson and McVay. The plaintiffs argue, however, that the defendant recouped those costs from its subcontractors through the change order process. The plaintiffs claim that the defendant used change orders to carve its costs for the CCIP out of the subcontractors' contract prices, rather than adjusting the subcontractors' costs to reflect the fact that the CCIP relieved them of the responsibility to provide their own insurance. Thus, in the plaintiffs' view, the subcontractors actually “paid” workers' compensation benefits to Thompson and McVay, with the defendant serving as a mere intermediary. The defendant, however, responds that the change orders simply removed the costs that the subcontractors would have incurred to procure their own insurance, had a CCIP not been in place, from their subcontracts. The defendant contends that this price adjustment simply prevented it from “double-paying” for the subcontractors' insurance coverage. We agree with the defendant, and conclude that there is no genuine issue of material fact as to whether the defendant paid for all of the benefits provided to Thompson and McVay through the CCIP.
First, the defendant's standard subcontract and the manual demonstrate that the change orders eliminated the subcontractors' costs to procure their own insurance, rather than required the subcontractors to bear the costs of the CCIP. Both documents required the subcontractors to include a statement of their insurance costs in their bids. According to the manual, these costs represented the subcontractors' “normal cost[s] for the insurance coverages ... provided under the CCIP ” as if “[the] CCIP insurance coverage was not provided....” (Emphasis added.) Both documents also explain that if the defendant opted to implement a CCIP, those costs would be subtracted from each subcontract through appropriate change orders. Furthermore, in the event that the subcontractor's payroll increased, the subcontractor would issue a change order to the subcontract specifying its increased payroll, as well as its increased insurance costs to complete that work, had a CCIP not been in place. The manual specifically required the subcontractors to “price [these] [c]hange [o]rders to include their [i]nsurance [c]ost[s].” (Emphasis added.) Thereafter, according to the subcontract and manual, the defendant would issue its own changes orders to subtract those additional costs from the subcontract. See footnote 8 of this opinion. At the conclusion of the performance of the contract, an audit would be performed and the “insurance credit” to the defendant would be adjusted based upon actual payrolls incurred in the project and the final contract amount. This “credit” would reflect any change in the subcontractor's insurance costs throughout the project. If, conversely, the subcontractor overestimated its insurance costs, the subcontractor would be “credited accordingly.”
The change orders themselves reflect this understanding of the change order process. United Anco's original bid to the defendant included an insurance cost of $69,877.68. The defendant subsequently issued a change order reducing United Anco's subcontract price by that exact amount. Additionally, after the defendant implemented the CCIP, Ducci Electrical asked Instrument Sciences to provide its normal insurance cost to complete its work, because Ducci Electrical's subcontract with the defendant “was negotiated prior to [the] CCIP.” Instrument Sciences provided an insurance cost of $19,945.95. Ducci Electrical then issued a change order to Instrument Sciences' subcontract in that exact amount. Later, when United Anco's payroll significantly increased, resulting in a new insurance cost of $1,156,604.04, the defendant issued additional change orders to deduct this exact amount from the corresponding increases in United Anco's subcontract.
The manual states that the subcontractors are “solely responsible for recovering insurance costs” from subcontractors of lower tiers.
The plaintiffs and the dissent have not established the existence of a genuine issue of material fact with respect to any relationship between the change orders to the subcontracts and the CCIP premium. The $1,150,465 CCIP insurance premium paid by the defendant encompassed workers' compensation coverage for dozens of subcontractors involved in the project, not just United Anco, Ducci Electrical, and Instrument Sciences. See footnote 5 of this opinion. The insurance rate to calculate this premium was $5.92 per $100 of payroll. This rate was used, in conjunction with the aggregate payroll for all remaining work on the project by the defendant and its subcontractors, to calculate the CCIP premium. United Anco, however, used its own insurance rate of $10.93 per $100 of payroll to calculate its insurance costs. Similarly, Ducci Electrical and Instrument Sciences used their insurance rates of $5.38 and $8.97 per $100 of payroll, respectively, to calculate their costs. Thus, United Anco's and Instrument Sciences' insurance costs, as specified in their bids and reflected in their change orders, did not directly relate to the CCIP insurance premium.
Moreover, the manual and insurance policies also confirm that the defendant would pay the entire cost of the workers' compensation coverage provided to all subcontractors under the CCIP. The manual states that the defendant “provides” and “will furnish” workers' compensation insurance “for the benefit of all enrolled parties.” The manual characterizes the defendant as the “[s]ponsor” of the program, and explicitly states that it “pays the cost of the CCIP insurance coverage.” The CCIP enrollment application further states that the “[p]remiums for [the] program are the responsibility of [the defendant ].” (Emphasis added.) Additionally, the insurance policies issued to the defendant, United Anco, and Instrument Sciences all describe the defendant as the “[s]ponsor” of the CCIP, and contain the following sentence: “This policy is issued at the direction of the [s]ponsor, who shall be solely responsible for payment of [the] premium.” (Emphasis added.) Consistent with this documentary evidence, Daniel Cretella, the defendant's financial analyst, testified at his deposition that the change orders represented the subcontractors' costs to procure their own insurance for the project, had a CCIP not been in place, and not the costs of the CCIP. He testified that the change orders had “nothing to do with the cost of the CCIP” and instead represented “the particular subcontractor's cost to purchase insurance had they been purchasing insurance.” He explained that the “payroll that [the subcontractors] were expending had a rate associated with [it]. That rate included the cost of insurance had they been providing the insurance. So the [change orders] carve out [those] insurance costs ... because we are now providing that.” (Emphasis added.) With respect to the defendant's subsequent change orders based on the subcontractors' increased payrolls, Cretella explained that the subcontractors “estimat[e] at the start of this process what their payroll is going to be that they expend. If their payroll exceeds that ... then their cost of insurance ... would have gone up. So, therefore, the subcontract should have been reduced by that amount ....” (Emphasis added.) Cretella further testified, “[w]e back out the insurance cost that ... we were now purchasing based on their actual cost that would have been included in their bid....” (Emphasis added.) Cretella also confirmed that the defendant was “responsible for all premiums [and] all deductibles” under the policy, and that the defendant “pa[id] the premium 100 percent.” Neither the plaintiffs nor the dissent point to any evidence in the record disputing Cretella's financial analysis of the relationship between the subcontractors' insurance costs and the CCIP.
The plaintiffs and the dissent argue that the fact that the defendant is not listed as an additional insured on the policies issued to United Anco and Instrument Sciences implies that the defendant did not bear the costs of the CCIP. Old Republic issued the defendant its own policy, however, and the defendant therefore had no need to be included on the policies issued to United Anco and Instrument Sciences. Moreover, what is important is that those policies listed the defendant as the sponsor of the CCIP, and clarified that the defendant shall be “solely responsible for payment of [the] premium.”
The following exchange also occurred between the plaintiffs' counsel and Cretella:
“Q. ... I just want you to tell me if I understand the way the CCIP worked correctly; that is that [the defendant] paid an initial amount for the premium and ... once a contractor or subcontractor would come within the CCIP, there would be a calculation ... as to what that contractor or subcontractor's premium would be within the CCIP, and [the defendant] would bill the contractor or subcontractor for that premium? ...
“A. No. I don't believe that's an accurate depiction at all....
“Q. Did [the defendant] bill in any fashion United Anco for premiums for workers' [compensation]?
“A. No.
“Q. Did they use change orders to bill them?
“A. No.
“Q. Were there change orders associated with CCIP premiums?
“A. No....
“Q. Did any of the contractors or subcontractors pay anything [toward] the CCIP premiums?
“A. No.
“Q. Did they ever reimburse [the defendant] anything for the CCIP premiums?
“A. No.”
We respectfully disagree with the plaintiffs' and dissent's contention that Cretella “admitted” that “the defendant did not provide the CCIP to the subcontractors for free.” When asked directly whether the defendant provided workers' compensation insurance to its subcontractors for free, Cretella stated, “[w]e didn't give them anything, so no. We were providing the insurance. ” (Emphasis added.) Cretella then went on to clarify that the subcontractors gave no consideration in exchange for receiving the insurance coverage.
The plaintiffs and the dissent argue, however, that several sections of the manual support their contention that the subcontractors actually paid the costs of the CCIP through the change order process. They point to one section of the manual stating that the defendant “will, when due, on behalf of the subcontractor [s ],” pay the “CCIP [i]nsurance [a]mount” to the relevant insurance company. (Emphasis added.) The plaintiffs also note the manual contains a section titled “identifying subcontractor insurance costs” as detailing “how [the] CCIP insurance amounts are paid for. ” (Emphasis added.) Lastly, the plaintiffs point to a provision of the manual stating that the subcontractors' insurance costs would be “taken against” their contracts.
The plaintiffs and the dissent also contend that the defendant profited from the CCIP, and argue that this fact supports their claim that the defendant “billed” its subcontractors for the costs of the CCIP. That the CCIP was economically advantageous for the defendant does not, however, affect the fact that it ultimately bore the costs of the CCIP. The defendant may have opted to implement the CCIP because it could provide workers' compensation insurance coverage at a lower cost than would be incurred were its subcontractors to be charged with providing such coverage. The manual required the subcontractors to include any profit and overhead that they typically charge on their insurance premiums in their bids to the defendant. United Anco included a 10 percent profit and overhead amount in its bid, and Ducci Electrical included a 16.3 percent profit and overhead amount in its bid. These amounts increased the subcontractors' insurance costs accordingly, and were incorporated into the costs later deducted from their contracts. In other words, the subcontractors' total insurance costs, including the profit and overhead amounts, were added and then deducted from their contracts. The fact that the defendant avoided having to pay the subcontractors a profit on their insurance premiums by implementing the CCIP does not change the fact that the defendant did pay the premium, deductible, and other costs for the CCIP.
We disagree with the plaintiffs' and dissent's argument that these sections of the manual raise a genuine issue of material fact as to whether the defendant bore the costs of the workers' compensation benefits provided to Thompson and McVay. The defendant did, in fact, pay the CCIP premium “on behalf of the subcontractor[s],” because the subcontractors received the benefit of workers' compensation coverage under the CCIP, rather than having to provide their own coverage. This language in the manual therefore does not suggest that the defendant served as a mere pass-through for the costs of the CCIP. Additionally, the section of the manual describing “how [the] CCIP insurance amounts are paid for” emphasizes that the defendant “pays the cost of the CCIP insurance coverage.” Thus, this section of the manual does not necessarily indicate that the cost of the CCIP is calculated and paid for during the bidding and change order processes. Furthermore, the manual's statement that the subcontractors' insurance costs would be “taken against” their contracts does not raise a genuine question of whether the subcontractors directly reimbursed the defendant for the costs of the CCIP. The defendant had no choice but to “take” these costs “against” its subcontracts in order to avoid double paying for the subcontractors' insurance coverage. Otherwise, the defendant would have paid its subcontractors to provide their own insurance coverage and paid for the same coverage under the CCIP. Such “duplicative insurance coverage ... would be contrary to our long-standing public policy against economic waste.” Misiti, LLC v. Travelers Property Casualty Co. of America, 308 Conn. 146, 167–68 n. 12, 61 A.3d 485 (2013) ; see also DiLullo v. Joseph, 259 Conn. 847, 854, 792 A.2d 819 (2002) (“[t]his duplication of insurance would, in our view, constitute economic waste”). We, therefore, conclude that no genuine issue of material fact exists as to whether the defendant “paid compensation benefits” to Thompson and McVay under § 31–291. Accordingly, the trial court properly rendered summary judgment in favor of the defendant on the plaintiffs' claims.
The plaintiffs and the dissent argue that, because Cretella testified that a section of the manual describing adjustments to the subcontractors' contracts for their insurance costs was “inaccurate,” a genuine issue of material fact exists as to whether the defendant bore the costs of the CCIP. The manual expressly states, however, that in the event that any provisions of the manual conflict with the CCIP insurance policies, the policies “shall govern.” Consistent with this statement, Cretella explained that he did not seek to change the language of the manual because “[t]he manual is pretty clear that the policies govern. And to the extent that there's anything in [the manual] that's contradictory, defer to the policies.... The policies are pretty clear as to who owned [the] obligation to pay [the] premiums and deductibles.” Indeed, as stated previously in this opinion, the CCIP insurance policies explicitly state that the defendant pays the costs of the CCIP.
Cf. Djeddar v. Rowley Spring & Stamping Corp., Superior Court, judicial district of New Britain, Docket No. CV–06–5001837–S, 2008 WL 4632417 (August 25, 2008) (denying summary judgment in favor of principal employer because “there was no evidence of any agreement between [the employer] and [the contractor] obligating [the contractor] to provide workers' compensation coverage ... including no agreement that any part of [the employer]'s payment to [the contractor] would be used to purchase workers' compensation coverage”); Geherty v. Connecticut Yankee Atomic Power Co., Superior Court, judicial district of Hartford, Docket No. CV–95–0546860–S, 1998 WL 226052 (April 20, 1998) (denying summary judgment in favor of principal employer because employer failed to show that it was “primarily responsible for providing workers' compensation insurance to the [employee] ... that [it] paid a separate fee to cover [the contractors'] expenses for such insurance, or that [it] or [its] insurance carrier paid such workers' compensation benefits” to employee).
The judgment is affirmed. In this opinion PALMER, ZARELLA, ESPINOSA, VERTEFEUILLE and LAVINE, Js., concurred.
EVELEIGH, J., dissenting.
I agree with the majority that the trial court in the present case improperly determined that “the plain and unambiguous meaning of the word ‘paid’ ... in [General Statutes] § 31–291 is ‘simply to transfer money.’ ” I further agree with the majority that “the term ‘paid compensation benefits' in § 31–291 requires a principal employer to demonstrate that it bore the cost of all of the workers' compensation benefits to an injured employee in order to obtain statutory immunity from civil actions.” (Emphasis in original.) I disagree with the majority, however, that “although § 31–291 requires a principal employer to bear the costs of all of the injured employees' benefits to be entitled to immunity, there nevertheless is no genuine issue of material fact as to whether the [named] defendant [O & G Industries, Inc.] bore all of those costs in this case.” (Footnote added.) To the contrary, I would conclude that the defendant did not meet its burden of demonstrating that there is no genuine issue of material fact that it “bore the cost” of all of the workers' compensation benefits and that, therefore, the trial court improperly granted summary judgment in favor of the defendant on the claims brought by the plaintiffs James L. Thompson II, Carol M. Thompson, and James McVay. In the alternative, I would conclude that the matter should be remanded to the trial court for the parties to have the opportunity to relitigate and the trial court to determine, in light of the majority's clarification of the term “paid” in § 31–291, whether there is a genuine issue of material fact as to whether the defendant has statutory immunity. Therefore, I respectfully dissent.
I note that, although there are other defendants in the present case, they are not involved in this appeal. See footnote 3 of the majority opinion. For the sake of simplicity, I refer to O & G Industries, Inc., as the defendant.
For the sake of consistency with the majority opinion, I refer to James L. Thompson II, Carol M. Thompson, and James McVay collectively as the plaintiffs and to James L. Thompson II by his surname. See footnote 2 of the majority opinion.
I agree with the facts and procedural history as set forth in the majority opinion. I will provide additional facts as necessary. I begin my analysis with the standard of review applicable to a trial court's decision to grant a motion for summary judgment. “Practice Book § 17–49 provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. A party moving for summary judgment is held to a strict standard.... To satisfy his burden the movant must make a showing that it is quite clear what the truth is, and that excludes any real doubt as to the existence of any genuine issue of material fact.... As the burden of proof is on the movant, the evidence must be viewed in the light most favorable to the opponent.... When documents submitted in support of a motion for summary judgment fail to establish that there is no genuine issue of material fact, the nonmoving party has no obligation to submit documents establishing the existence of such an issue.... Once the moving party has met its burden, however, the opposing party must present evidence that demonstrates the existence of some disputed factual issue.... It is not enough, however, for the opposing party merely to assert the existence of such a disputed issue. Mere assertions of fact ... are insufficient to establish the existence of a material fact and, therefore, cannot refute evidence properly presented to the court under Practice Book § [17–45].... Our review of the trial court's decision to grant [a] motion for summary judgment is plenary.” (Citation omitted; internal quotation marks omitted.) Ferri v. Powell–Ferri, 317 Conn. 223, 228, 116 A.3d 297 (2015). I disagree with the majority that “[a]pplying this construction of § 31–291 to the present case” there “is no genuine issue of material fact as to whether the defendant paid for all of the benefits provided to Thompson and McVay” through the contractor controlled insurance program (CCIP). To the contrary, under the construction of § 31–291 adopted by the majority, I would conclude that the defendant did not meet its burden of proving that there is no genuine issue of material fact that it “bore the cost of all of the workers' compensation benefits....” (Emphasis in original.) Instead, I would conclude that, although the defendant may have demonstrated that it transferred the funds for the workers' compensation benefits to the insurers, viewing the evidence in the light most favorable to the nonmoving party, there is a genuine issue of material fact as to whether the defendant bore the entire cost of the workers' compensation benefits. Specifically, a review of the evidence that the plaintiffs submitted in connection with their opposition to the motion for summary judgment demonstrates a genuine issue of material fact regarding whether, under the definition adopted by the majority in this opinion, the defendant bore the entire cost of the workers' compensation benefits.
Pursuant to the subcontracts in the present case, each of the defendant's subcontractors was required to participate in the CCIP. Through the CCIP, each subcontractor was issued its own workers' compensation policy with its own policy number. The defendant was not an insured on these policies. These policies contained an “Assignment Consent Endorsement,” providing that the term “[s]ponsor as used in this policy means [the defendant]” and providing that “[t]his policy is issued at the direction of [s]ponsor ... who shall be solely responsible for payment of [the] premium.” The endorsement further provided that “[t]he [i]nsured has assigned to [the] [s]ponsor” the following rights: 1) “[t]he [i]nsured's right, title and interest to any and all returns of premiums, dividends, discounts or other adjustments”; and (2) “[t]he [i]nsured's rights of cancellation as [i]nsured.” The defendant was not an insured on the policies issued to its subcontractors. Although the policies contained an “Alternate Employer Endorsement,” which provided that the defendant would be considered an insured if the employee became a temporary or special employee of the defendant, it is undisputed that the plaintiffs never became temporary or special employees of the defendant. Accordingly, the defendant was never an insured under the policies at issue in the present case. Therefore, although the insurance policies themselves demonstrate that the defendant was “solely responsible for payment of [the] premium,” the fact that the defendant was never named as an insured on the policy raises a question of fact as to what entity actually bore the cost of the workers' compensation benefits provided to Thompson and McVay.
The CCIP Insurance Manual (manual) also raises a question as to which entity bore the cost of the benefits. First, the manual explains that “[the defendant] provides [w]orkers' [c]ompensation, [g]eneral [l]iability and [e]xcess [l]iability insurance for all [e]nrolled [p]arties under the CCIP for [w]ork performed at the [p]roject [s]ite.” The manual, however, then details a complicated procedure, which it describes as “the procedures for bidding and how CCIP insurance amounts are paid for.” The manual further provides that it “contains several worksheets that can help [subcontractors] determine [their] insurance costs for [the] project.” The manual explained as follows: “Rates are due at the time of [the defendant's] delivery of this manual. Once collected, these will be used for the life of the subcontractor's performance of work on site. [A deductive change order] will be taken against the contract in the amount of the [t]otal [v]erified [i]nsurance [c]osts based upon the subcontractor's estimated labor and actual insurance costs. As additional [subcontract] tiers are identified and verified, or initial insurance costs are adjusted, an additional deductive change [order] may be applied. In the event that the actual insurance costs for all tiers exceed the
estimated costs, [the defendant ] may take an additional deductive adjustment to the subcontract. ” (Emphasis added.) As the foregoing demonstrates, the procedures for obtaining workers' compensation insurance ensured that the defendant would be able to recoup any additional costs that it incurred to provide workers' compensation insurance to its subcontractors. This language in the manual seems to indicate an arrangement by which the defendant is able to recover all costs for insurance from the subcontractor and, therefore, raises a genuine issue of material fact as to whether the defendant bore the cost for the workers' compensation insurance, or was able to recover all costs from its subcontractors.
The manual also explains that each “[s]ubcontractor shall include this CCIP [i]nsurance [a]mount in its [a]pplication(s) for [p]ayment when and as directed by [the defendant]. [The defendant] will, when due, on behalf of the subcontractor, make such payment by delivering the CCIP [i]nsurance [a]mount (or the portion of the CCIP [i]nsurance [a]mount that was included in the [a]pplication for [p]ayment) to the relevant [w]orkers' [c]ompensation and [g]eneral [l]iability insurance companies. [The defendant] will deliver the balance of the [a]pplication for [p]ayment due for [w]ork completed to the subcontractor.” (Emphasis added.) This language from the manual seems to imply a relationship whereby the defendant acts as the conduit for the money of the subcontractor, but does not bear any cost for workers' compensation insurance itself. At his deposition, Daniel Cretella, the defendant's financial analyst, testified as follows regarding this portion of the manual in response to questions from the plaintiffs' counsel:
“Q. Okay. And if you look at [the] Monthly Payments [section of the manual], it says [that the] subcontractor shall include the CCIP amount in its application for payment when and as directed by [the defendant]. [The defendant] will, when due, on behalf of the subcontractor make such payment by delivering the CCIP insurance amount to the relevant workers' compensation and general liability insurance company. That was the practice, correct?
“A. That's not accurate....
“Q. That's not accurate? Okay. Now, this identifies the process where a payment would be made by [the defendant] on behalf of the contractor and then a deductive change order would be applied to the bid to account for the workers' compensation costs, correct? ...
“A. That is not correct....
“Q. Okay. That's what it says [in the manual] though, right? ...
“A. What you just read is what it says.
“Q. Well, the concept is as I described, no? ...
“A. No, that's not true.
“Q. Okay. So [this section of the manual is] inaccurate?
“A. I would say that that section is inaccurate.” (Internal quotation marks omitted.)
This additional colloquy occurred between Cretella and the plaintiffs' counsel regarding the manual:
“Q. Okay. In the subcontractor bid section, do you see that? ...
“A. Yes.
“Q. Okay. The second sentence says, ‘the section ... identify[s] subcontractor insurance costs describe[s] the procedure for bidding and how [the] CCIP insurance amounts are paid for.’ Do you see that?
“A. I see it.
“Q. By whom? Paid for by the subcontractor, the contractor, or [the defendant]? ... Or somebody else? What is your interpretation of that sentence? So let me ask you ... would [that] sentence say, the section ... identifying subcontractor insurance costs describe[s] the procedures for bidding and how [the] CCIP insurance amounts are paid for by the contractor or [the defendant]? ...
“A. The way I would interpret that, because it starts off saying, ‘the section ... identifying subcontractor insurances costs' ... is the procedure by which we are identifying the scope or that piece of the contract that would be the subcontractor's responsibility to purchase insurance. So the cost that they would be paying for insurance if it was left in their contract.
“Q. Okay. Paid for by the contractor?
“A. The subcontractor, I think is a more accurate, you know, statement there. If the subcontractor was purchasing insurance. Again, that cost that's part of their contract.
“Q. Okay. So just so I'm clear on this, it's paid for by the subcontractor, meaning a contractor on the job other than [the defendant]? ... Is that fair to say?
“A. I'm saying, again, my interpretation only is that this section ... ‘identifying subcontractor insurances costs' ... [i]s referring to specifically the cost that was included in the bid in ... each individual subcontractor's contract for carrying insurance.
“Q. Right. So my question again is [whether] that sentence mean[s] paid for by the subcontractor meaning an entity other than [the defendant]? ...
“A. Prior to us relieving them of their obligation, yes....
“Q. Let me ask it this way, that sentence is directed to the subcontractor, correct? ...
“A. This is the subcontractor bid section.
“Q. Okay. So it's directed to the subcontractor, right?
“A. Okay.
“Q. Is that a yes?
“A. Yes.
“Q. Okay. And then it says ... ‘[this manual] contains several worksheets that can help you determine your subcontractor insurance costs for the project.’ Do you see that?
“A. I see it.
“Q. And is the insurance cost for the project [that would be labeled on forms] as the total initial insurance cost? Is that what they are referring to? ...
“A. Yeah.... This is to help identify the insurance costs that the subcontractor had in their subcontract, that they carried in ... had they had to provide the insurance.”
The fact that Cretella testified that the defendant's practice was not consistent with the process described in the manual is significant. The manual describes the defendant as making payments on behalf of the subcontractors and details how the defendant's subcontractors can determine their insurance costs for the project. Though other aspects of the manual had been altered during the formation process, Cretella admitted that the defendant never asked for this “inaccurate” section to be changed. In my view, this conflict between the language of the manual and Cretella's deposition testimony, in and of itself, creates a material question of fact as to which parties, the defendant or its subcontractors, bore the cost of the workers' compensation insurance in the present case.
As this court has explained, when “there is room for a reasonable difference of opinion among fair-minded jurors,” summary judgment is inappropriate. (Internal quotation marks omitted.) Labbe v. Pension Commission, 239 Conn. 168, 192, 682 A.2d 490 (1996). The fact that Cretella testified that these portions of the manual were inaccurate establishes a genuine issue of material fact. See Hurley v. Heart Physicians, P.C., 278 Conn. 305, 321, 898 A.2d 777 (2006) (“[w]e agree with the plaintiffs that they provided a sufficient evidentiary foundation to demonstrate the existence of a genuine issue of material fact—pas to whether [the defendant's representative] behaved in a manner in derogation of the [a] technical manual—sufficient to have precluded the trial court from [granting summary judgment]”). In the present case, the plaintiffs, through the deposition testimony of Cretella, have presented a sufficient evidentiary basis to demonstrate the existence of a genuine issue of material fact as to whether the defendant acted as a conduit for premium payments on behalf of the subcontractors and, therefore, did not bear the entire cost of the workers' compensation benefits.
An examination of the contractual documents for the subcontractor that employed Thompson, United Anco Services, Inc. (United Anco), also raises a genuine issue of material fact. Pursuant to the procedures detailed in the manual, when United Anco submitted its bid to the defendant, it submitted a standard form to the defendant's insurance broker. On this form, United Anco estimated its total insurance premium to be $63,525.16. Pursuant to the manual, United Anco added a profit charge to the total insurance premium, making the total insurance cost $69,877.68. Throughout the course of the project, the defendant deducted a total insurance premium cost of $1,156,604.04 from United Anco's subcontract. Of this amount, 10 percent was a profit that United Anco had added on to its insurance cost. The deductions for insurance premium costs had no relation to the actual cost born by the defendant from implementing the CCIP. In fact, the CCIP was intended to be a profit center for the defendant.
The following colloquy occurred during questioning by the plaintiffs' counsel at Cretella's deposition regarding the underlying purpose of the CCIP:
“Q. Well, the concept was going into it that you would save that money, correct?
“A. That's the concept.
“Q. Okay. Is that the only place that you would have sort of a profit center on a CCIP, would be you would be able to save paying the contractor the profit margin that they would add on top of the insurance? ...
“A. No....
“Q. Okay. Where are other profit centers?
“A. Well, it is economies of scale.... So if you have 100 folks going to 100 different brokers and 100 different insurance companies, you are going to have commissions and things that are paid along the way. Whereas if you aggregate and then purchase that centrally, [there is] a savings. It's economies of scale.”
Indeed, the following colloquy between the plaintiffs' counsel and Cretella explains the process:
“Q. Okay. So there's a bid package which includes insurance. You then take out the CCIP cost from the bid package and a profit amount that would be attributable to the insurance and that is the net amount that the contractor is paid. Is that a fair statement?
“A. No. “Q. Okay. And why is that incorrect?
“A. Because it's got nothing to do with the cost of the CCIP, it's got to do with the particular subcontractor's cost to purchase insurance had they been purchasing insurance. It's their rates based on their declaration pages at their lost history. It's what they would have paid, what they included in their contract in that bid amount that you put that if they were the ones that were going to purchase that insurance....
“Q. Well ... there's an amount—at least initially the process would be that you submit the form to [the defendant's insurance broker] and then they come back with a letter verifying the amount for the particular contractor ... right?
“A. That's correct.
“Q. Okay. And then ... that amount ... is subtracted off of the gross bid amount to show what I would call a net bid amount minus insurance, correct?
“A. That's correct.
“Q. Okay. And then the contract is run through, the particular contractor finishes his work and then there's a final calculation that's made by [the defendant's insurance broker] as to what the actual insurance amount or premium amount attributable to that subcontractor would be, correct? ...
“A. The subcontractor would have paid, if they were still contractually obliged to buy insurance whether it be—they would have had to pay, based on the payroll expended, is how insurance is calculated.”
The facts that were before the trial court raised the issue of whether, through this deductive change order system, the defendant merely relieved the subcontractors from having to procure the workers' compensation insurance coverage but not from having to pay for it, as statutorily required. The fact that, following the implementation of the CCIP, the defendant decided to implement the aforementioned deductive change order system rather than reinstitute the subcontractor contracts and simply bill the subcontractors for their work raises questions of fact as to who actually shouldered the financial burden of the workers' compensation benefits. If the legislature intended for the principal employer to merely be responsible for procuring the insurance, it would have said so. I do not believe that the statutory language or the legislative history support an understanding of § 31–291 that would grant immunity to general contractors, where the subcontractors reimburse the general contractor for the premium costs or the general contractor is making a profit off of the subcontractors by implementing a CCIP whereby it deducts the subcontractors' projected insurance costs, which include a profit margin. The deposition testimony of Cretella supports the proposition that the defendant saved approximately $868,000 by taking the insurance credits from the subcontractors and administering the insurance program itself. Certainly, under the construction of § 31–291 adopted by the majority, there is a genuine issue of material fact as to whether the defendant funded the workers' compensation benefits, either partially or in full, largely from the insurance credits.
At oral argument on the defendant's motion for summary judgment, the trial court stated as follows: “I'd parse this into two things. There's the obligation to procure and provide the insurance ... and the obligation to pay for it. What I see is [the defendant] relieving [its subcontractors] of the obligation to procure and provide the insurance, but not relieving them of the obligation to pay for it.”
At Cretella's deposition, the following exchange occurred during questioning by the plaintiffs' counsel:
“Q. ... I want to know a little bit about ... the overhead and profit on the insurance premium. Okay? So hypothetically, if you don't have a CCIP it's assumed that there's a profit assigned to the amount that the contractor pays for insurance? ...
“A. Yes....
“Q. Normally, the contractor would recover that profit amount from the general contractor as part of the bid price—
“A. Yes.
“Q.—or include it in the bid price?
“A. Right. So ... for instance, this $3 million United Anco bid here is based on whatever estimate of hours they had for payroll.
“Q. Right. Understood.
“A. And then any cost that they would have included in their bid, overhead, profit, insurance, all that other stuff ... that's associated with that bid amount. As I understand it, when they are doing bids you kind of work down to the bottom line and you add a profit and overhead amount that goes on everything that is above the line which would be payroll, insurance, all that stuff.... So yes, the insurance does have profit and overhead associated with it.
“Q. Some of them are 10 percent, some of them are 15 percent, how is that determined?
“A. The 15 percent was the standard rate that was put on the forms. You had some subcontractors, I believe, that came back and said [they] don't carry 15 percent on this, [they] carry something less. And that was the negotiation that took place....
“Q. Okay. So someone claimed that they took a 15 percent profit on top of the insurance and some of them would claim they took a 10 percent profit on top of the insurance and, ultimately, [the defendant] would decide with each contractor whether they were going to get a 10 percent or 15 percent allocation?
“A. That's correct.”
The colloquy between Cretella and the plaintiffs' counsel continues:
“Q. Okay. Is there any material in front of you where you would be able to determine what that 10 or 15 percent profit line would be aggregated for the whole CCIP? ...
“A. No.
“Q. Okay. Because you gave me sort of a spreadsheet that showed a delta like $300,000. Did you prepare that?
“A. I did.
“Q. Okay. And what does that number mean?
“A. ... [W]ithin that would be ... the total of the insurance cost that would have been for the [subcontractor] plus their overhead and profit if any aggregated....
“Q. Okay. So is there a way that we could back from that number into what the overhead and profit would be? ... Is there a way you could estimate that?
“A. Sure.
* * *
“Q. Can you do that calculation ... sort of on an estimated basis?
“A. Again, this is a total assumption. So if we go with 12 percent as an average and you divided that by 1.12, you'll get a number that gives you the base, if you will, or the insurance cost of [approximately $7,300,000 ]. And I've got a delta, which would be the overhead and profit line. Again, all assumptions of $868,000, we'll call it.
“Q. Okay. So you are giving me sort of a ballpark which would be assuming that some of the contractors had a 10 percent, some had 15 percent, maybe some had 13 percent, we are just using that as an example?
“A. That's correct. ” (Emphasis added.)
In accordance with the new definition of “paid” adopted by the majority, I would conclude that the employer must provide the workers' compensation benefits to the subcontractors for free. Indeed, as the majority concludes, the employer must bear the entire cost of the workers' compensation benefits. In my view, another genuine issue of material fact exists because the evidence demonstrates that the defendant does not represent that it provided these benefits to the employer for free. Indeed, Cretella admitted at his deposition that the defendant did not provide the CCIP to the subcontractors for free. At oral argument before this court, in response to a question of whether the defendant provided the insurance for free, the defendant's attorney initially responded by stating that “the word free is a very tricky thing.” I would conclude that, unless the workers' compensation benefits were provided to the subcontractor for free, a genuine issue of material fact exists regarding what entity or entities bore the cost of the workers' compensation benefits in the present case.
The following colloquy occurred at Cretella's deposition during questioning by the plaintiffs' counsel:
“Q. ... So is it your position you gave them this insurance for free? ...
“A. It's an interesting way to put it. It's a more effective way ... to purchase insurance, if you will....
“Q. Just answer my question. Did you give them all this insurance for free? ... Is that your contention?
“A. Did we give it to them for free? We didn't give them anything, so no. We were providing the insurance....
“Q.... It's your contention that there was no consideration paid at all by United Anco or [the defendant's other subcontractors] for workers' compensation insurance within the CCIP?
“A. That is correct.”
Specifically, when asked during oral argument whether the defendant “provided the insurance for free” counsel for the defendant gave the following response: “The word free is a very tricky thing. They incurred a lot of—they paid a lot of money and there's a trade-off when you bring a subcontractor on there's certain incentives in either direction. If you use the word free in the context of the subcontractor did not have to pay a dime for it, then yes, that's the word to use if that's the word you're comfortable with, I will be as well....”
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Furthermore, the trial court recognized the import of the evidence submitted by the plaintiffs, finding as follows: “The plaintiffs also argue that in reality the subcontractors actually ‘paid’ the insurance policy under the CCIP ... with [the defendant] acting as an intermediary. The plaintiffs explain that when the subcontractors originally submitted their bids, they included as a line item the cost of purchasing workers' compensation insurance for the project. Later, when the subcontractors enrolled in the CCIP, [the defendant] deducted from the subcontractor's contract price the line item cost used in the bid for estimating the cost of procuring insurance. The plaintiffs cite this ‘deduct change order for insurance premium’ process as proof that the intent of the CCIP was to have the subcontractors, not [the defendant], pay for the workers' compensation insurance. In essence, the plaintiffs argue that [the defendant] wrote checks and authorized wire transfers merely as a conduit for subcontractor money. The plaintiffs also offer evidence that the CCIP ... allowed [the defendant] to charge a general contractor's mark-up on the CCIP premiums, thereby allegedly profiting on the transactions. Finally, plaintiffs point to language in [the manual] stating that ‘premium payments are made on behalf of the subcontractor.’ On the basis of these proofs, the plaintiffs suggest that the defendant ... has failed to establish as undisputed fact that it ‘paid’ workers' compensation benefits within the meaning of § 31–291.
“The court disagrees. In order for these facts to be material to the application of § 31–291, the court would need to interpret and apply ‘paid’ in a fashion well apart from its plain and ordinary meaning. Under the ordinary meaning of ‘paid,’ the person who tenders or transfers money to another in exchange for property or a service, or in satisfaction of an obligation, is deemed to the person that has ‘paid’ the debt or ‘paid’ for that which is received in exchange. The common usage of the word ‘paid’ does not contemplate an accounting of debits and credits and an economic analysis as to which party has in fact incurred a permanent change in [its] financial position as a result of a transaction.”
The majority rejects, however, the narrow interpretation of the term “paid” and concludes that it does require “a principal employer to demonstrate that it bore the cost of all of the workers' compensation benefits to an injured employee in order to obtain statutory immunity....” (Emphasis omitted.) As a result, the evidence that the plaintiffs presented to refute the motion for summary judgment does demonstrate that there is a genuine issue of material fact under the majority's definition of “paid” for purposes of § 31–291. Accordingly, I would conclude that the judgment of the trial court should be reversed and the matter should be remanded to that court with direction to deny the defendant's motion for summary judgment.
I would conclude that, because the trial court applied a narrow definition of the term “paid” as applied to § 31–291, it never reached the question of whether the defendant actually bore the financial burden of providing workers' compensation benefits to Thompson and McVay. Thus, in the alternative, I would conclude that at the very least this court should remand the matter to the trial court for reconsideration of the defendant's motion for summary judgment in light of this court's decision. See McDermott v. State, 316 Conn. 601, 611, 113 A.3d 419 (2015) (concluding that because trial court applied wrong legal standard to facts, it was “necessary to remand the case to the trial court for a new trial to allow the parties to present their cases with the correct legal standard in mind and to allow the trial court to evaluate the facts in light of this correct legal standard”).
Accordingly, I respectfully dissent.