Michigan Court Sides with Westfield Insurance in ‘Employee/Contractor’ Case

The Michigan Court of Appeals has reversed the ruling of a trial court in a case involving whether a commercial insurer or a personal insurer is responsible for paying no-fault personal injury protection benefits when a worker is injured in a commercial vehicle while working for the business owner of that vehicle.

The focus of Farm Bureau General Insurance Co. of America v. Westfield Insurance Co. is whether that worker was an employee or independent contractor.

Mark LaPointe drove grain trucks on a part-time basis for Larry Benore & Sons, an Erie, Mich., farming business owned by Craig Benore and his mother. LaPointe was seriously injured when the semi-tractor he was driving for Benore collided with a train and he was ejected from the truck. The vehicle was owned by Benore and insured by Westfield.

At the time, LaPointe’s own vehicles were insured by Farm Bureau, which began paying no-fault PIP benefits to LaPointe after the accident.

Farm Bureau then sought reimbursement from Westfield, arguing that because LaPointe was an employee of Larry Benore & Son and operating a truck owned by that company at the time of the accident Westfield, as the insurer of the business vehicle, was responsible for paying the PIP benefits.

Farm Bureau also sought declaratory judgment that Westfield was the “higher priority insurer” under Michigan statute MCL 500.3114.

Westfield filed a counterclaim seeking the opposite, asserting that LaPointe was not Benore’s employee but an independent contractor.

LaPointe and Craig Benore were friends and LaPointe worked for Benore & Son on an as needed/as available basis. LaPointe was employed full-time at another trucking company, a fact that was known to Benore.

To determine LaPointe’s employment status with Benore & Son, the trial court used an economic reality test that included such factors as the employer’s control of the worker’s duties and payment of wages, and its right to hire, fire and discipline the employee, and the “performance of the duties as an integral part of the employer’s business towards the accomplishment of a common goal.”

The trial court found that under the economic reality test, LaPointe was employee because: LaPointe had no control over his duties; he turned in his hours for pay at a rate set by Benore; and he could be hired and/or fired at will.

The trial court determined that LaPointe was a seasonal employee but an employee nevertheless, and declined to take up the issue of whether LaPointe was an independent contractor, as Westfield had argued.

Westfield was ordered to repay Farm Bureau for the benefits it previously paid to LaPointe and to pay all future PIP benefits due to LaPointe.

Westfield appealed.

Using the same economic reality test utilized by the trial court, the appeals court came to a completely different conclusion. It agreed with Westfield that the trial court was wrong in determining that LaPointe was an employee of Benore & Son, and in finding that Westfield is the higher priority insurer in the case.

Looking at the factors considered under the test, the appeals court found that LaPointe was not an employee because:

• “Benore exerted little control over LaPointe’s duties. The testimony indicates that Benore did little to monitor or supervise LaPointe as he transported the crops.”
• “LaPointe did more than just drive the trucks. Although driving was his primary task, LaPointe also would perform other tasks on occasion — often on his own initiative — in order to assist with whatever jobs Benore needed accomplished.”
• “Benore did not control the hours that LaPointe worked, or even whether LaPointe worked.”
• The fact that Benore and LaPointe were friends — their working relationship was “characterized as a friend helping a friend” — revealed the extent to which Benore lacked “control over LaPointe’s time and work.”
• Benore knew LaPointe had a full-time job as a semi-truck driver for another company, and not only did Benore not provide LaPointe with either a 1099 or a W-2 tax form, the two also bartered for work at times.

The case was remanded “for entry of an order granting summary disposition in favor of Westfield.”