Wednesday, January 07, 2009, 9:49 AM

COA Applies Foreign Workers' Comp Act To Bar Action For Local Injury

Yesterday the NC Court of Appeals (COA) issued an important decision barring tort claims by workers of foreign (out of state) companies who are injured in NC. The case is Burton v. Phoenix Fabricators and Erectors, Inc. Judge Geer wrote the opinion.

Under NC law, the receipt of workers' comp benefits doesn't bar the injured employee from bringing a civil action against an NC employer (a so-called Woodson claim). But suppose the employee is injured in NC but happens to work for a company based in another State and collects workers' comp benefits under that State's workers' comp law; and suppose that State's law says (unlike NC law) that workers' comp is the exclusive remedy so that the employer is immunized from suit in tort. Does that other State's law bar an employee from bringing the civil action here--i.e., does that other State's law trump NC law? Answer: yes.

In yesterday's case, the employees were killed here while helping construct a water tower. They worked for an Indiana corporation and were covered by Indiana workers' comp. After their deaths, their estates received workers' comp payments from Indiana. Indiana law says that workers' comp is the exclusive remedy; an injured employee can't also pursue a civil action against the employer.

Nonetheless, the estates filed civil actions here in NC against the employer, arguing that NC's substantive law (i.e., Woodson) should control because the injuries were sustained here (lex loci). The employer argued that, by electing to accept benefits under Indiana's workers' comp law, the estates were barred from pursuing civil actions here.

The COA agreed with the employer, holding: "the law of the state providing the workers' compensation benefits determines whether the workers' compensation statute of that state provides an exclusive remedy barring additional recovery through a tort action." This result is consistent with a 1991 NC Supreme Court case. It's also consistent with the Restatement (Second) of Conflict of Laws which says, "Recovery for tort or wrongful death will not be permitted in any state if the defendant is declared immune from such liability by the workmen's compensation statute of a state under which the defendant is required to provide insurance against the particular risk and under which . . . the plaintiff has obtained an award for the injury . . . ." As the COA observes, this rule is grounded on public policy concerns.

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