Insurer Upheld in Declining to Defend Employer Against Injured Worker’s Lawsuit

The New Jersey Supreme Court recently ruled that an insurer had no duty to defend an insured employer against an injured employee’s personal injury lawsuit alleging negligence and intentional harm.

The high court found that Hartford Underwriters Insurance Co. was not obligated to defend its insured, SIR Electric LLC, under a combined workers’ compensation and employers’ liability policy. The high court agreed with lower courts that Hartford had no duty to defend SIR against Dionicio Rodriguez’s negligence, recklessness and intentional wrongdoing claims, although the high court differed on why the intentional wrongdoing claim was not covered.

The high court agreed with lower courts that negligence- based allegations by Rodriguez were subject to the workers’ compensation exclusivity bar under the first part of Hartford’s insurance policy. But whereas the lower court lumped all of the allegations into one, the high court found that the allegation of intentional wrongdoing was different from the negligence claims. The high court found that this claim was also excluded from coverage, not by the workers’ compensation section of Hartford’s policy, but under the employer liability section of the policy that excludes allegations of intentional wrongdoing.

While working for the electrical contractor SIR, Rodriguez injured himself when opening an electrical panel on a breaker. Rodriguez filed for workers’ compensation benefits under SIR’s policy with Hartford and the insurer paid those benefits.

After Rodriguez began receiving benefits, he filed a personal injury complaint against SIR seeking money damages for his workplace injuries. SIR sought defense of the complaint from Hartford but the insurer disclaimed any obligation to provide a defense. SIR then sued Hartford, claiming that Hartford wrongfully denied defense coverage.

A trial judge granted Hartford’s motion to dismiss SIR’s complaint. The trial judge characterized Rodriguez’s case as “specifically and solely a Laidlow claim,” referring to a 2002 opinion (Laidlow v. Hariton Mach. Co., Inc.) that addressed the rare exceptions to the workers’ compensation act’s exclusive remedy of cases involving intentional wrong.

Under Laidlow, the only exception to the “workers’ compensation bar” is for injuries caused by “intentional wrongs,” for which an employee may still seek redress under common law causes of action. In Laidlow, the high court clarified the test to determine that “an intentional wrong is not limited to actions taken with a subjective desire to harm, but also includes instances where an employer knows that the consequences of those acts are substantially certain to result in such harm.”

The employer liability section of Hartford’s policy specifically excludes from insurance coverage any claims for “bodily injury intentionally caused or aggravated” by SIR.

Accordingly, the state Supreme Court concluded that Rodriguez’s negligence, gross negligence, and recklessness claims are limited by workers’ compensation exclusivity bar. His Laidlow intentional wrongdoing claim, by contrast, is not limited by that exclusivity bar but is not covered because the employer liability section of the Hartford policy specifically excludes any claims for “bodily injury intentionally caused or aggravated.” Thus, Hartford had no duty to defend SIR.