Contractor who Funded CCIP has “Principal Employer” Immunity from Injured Subcontractor Worker Claims

The Connecticut Supreme Court has held that workers’ compensation immunity from injured worker tort claims extends to the contractor that funded a project Contractor Controlled Insurance Program, or CCIP. The claims arose from an explosion at the Kleen energy plant in Middletown, CT on February 7, 2010. The plaintiffs in the current case were employees of subcontractors of O&G, the prime contractor.

The project had a CCIP established by O&G. As the CCIP “sponsor,” O&G paid the premiums for workers’ compensation coverage under the CCIP, and each subcontractor’s price was reduced by the amount of insurance costs designated by the subcontractors in their bids.

The plaintiffs argued that O&G had not “paid” for workers’ compensation premiums since the amounts for insurance premiums were deducted from each subcontractor. Further, the plaintiffs argued that O&G had not paid for all of the workers’ comp premiums. Thus, they argued, O&G had not “paid compensation benefits” as required in the pertinent workers’ comp statute, CT General Statutes § 31-291.

The CT high court found that the word “paid” in the context of the workers’ comp statute is ambiguous, and looked to legislative history for guidance. Based on history of 1988 amendments, the court found that “paid” meant to bear the costs of workers’ compensation, and further it required the contractor to pay all benefits, in order to enjoy immunity under the law. Applying these standards, the court held that O&G had fully paid the workers’ compensation benefits, even if it had received price adjustments from the subs in response. The price adjustments were simply a mechanism to eliminate paying twice for workers’ comp benefits, and not to shift the cost back onto the subs.

A dissent argued that the CCIP manual and subcontract terms suggested that the workers’ comp premium costs were shifted onto the subcontractors, but a majority of the justices held otherwise. Thus, in CT, a CCIP will provide workers’ comp immunity to the contractor who establishes and funds the CCIP. The case is Gonzalez v. O&G Industries, Inc., 2016 Conn. LEXIS 232 (Aug. 2, 2016).