Kubit v. Brattleboro Mem'l Hosp., Inc. ( 2011 )


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  • Kubit v. Brattleboro Mem’l Hosp., Inc., No. 363-7-10 Wmcv (Wesley, J., Aug. 4, 2011)
    [The text of this Vermont trial court opinion is unofficial. It has been reformatted from the original. The accuracy of the text and the
    accompanying data included in the Vermont trial court opinion database is not guaranteed.]
    STATE OF VERMONT
    WINDHAM COUNTY
    RANDI KUBIT and
    KENNETH KUBIT,
    Plaintiffs,
    WINDHAM SUPERIOR COURT
    v.                                             DOCKET NO. 363-7-10 Wmcv
    BRATTLEBORO MEMORIAL HOSPITAL,
    INC. a/k/a BRATTLEBORO MEMORIAL
    HOSPITAL,
    Defendant.
    ORDER ON DEFENDANT HOSPITAL’S MOTION FOR SUMMARY
    JUDGMENT
    Plaintiff Randi Kubit was injured when she slipped and fell while working as a
    nurse at Defendant Hospital, and she and her husband have sued the Hospital for
    negligence in maintaining the hospital premises. The Court has previously analyzed
    certain aspects of the claims and defenses of the parties in denying Plaintiff’s motion to
    compel discovery by entry issued June 23, 2011. Currently pending is the Hospital’s
    motion for summary judgment, in which it argues that it cannot be liable in tort because it
    was Randi’s statutory employer at the time of the accident. The Court agrees, and
    therefore GRANTS the Hospital’s motion for summary judgment.
    Background
    For purposes of this summary judgment motion, the Court views the evidence
    favorably to Plaintiffs, giving them the benefit of all reasonable doubts and inferences.
    See Samplid Enterprises, Inc. v. First Vermont Bank, 
    165 Vt. 22
    , 25 (1996).
    Although Randi Kubit was working as a nurse at Defendant Hospital at the time
    of her fall, her actual employer was a company called Access Nurses, an agency which
    supplied nurses to work at the Hospital pursuant to a contract between Access Nurses and
    the Hospital. Randi is receiving workers’ compensation benefits through Access Nurses.
    The Hospital is a nonprofit institution that provides medical care and services to
    patients for a fee. In providing these services, the Hospital utilizes the services of
    numerous independent contractors. However, there is no suggestion that the Hospital
    actually contracts out the overall management of the hospital operation, or that the entity
    that operates the hospital is separate from the entity that owns the hospital premises.
    Under the contract between the Hospital and Access Nurses, the nurses provided
    by Access Nurses were independent contractors rather than Hospital employees, and
    Access Nurses was required to, and did, provide workers’ compensation insurance for
    them. Additionally, the contract between the Hospital and Access Nurses provided that
    Access Nurses would indemnify the Hospital against any claims asserted against the
    Hospital by third parties in connection with Access Nurses’ performance of the contract.
    Analysis
    The Vermont Workers’ Compensation Act defines the employment relationship
    more broadly than the common law, for purposes of establishing both an employer’s
    obligation to pay benefits and the applicability of the exclusivity rule. See 21 V.S.A. §
    601(3). Under this statutory definition of employer, the operator of a business is liable
    for workers’ compensation benefits, and thus is not potentially liable in tort, for an injury
    to any worker carrying out any phase of the operator’s regular course of business, even if
    the injured worker is directly employed by an independent contractor rather than by the
    2
    operator of the business. Edson v. State of Vermont, 
    2003 VT 32
    , ¶¶ 6-8. The test,
    referred to as the “nature-of-the-business” test, focuses on whether the work the
    employee did through the independent contractor is an integral part of, or process in, the
    business carried on by the operator. In re Chatham Woods Holdings, LLC, 
    2008 VT 70
    ,
    ¶ 11 (“the purpose of this test is to impose liability on business owners who hire
    independent contractors to carry out some phase of their business”).
    Randi was injured while working as a nurse in a hospital, albeit as the direct
    employee of an independent contractor. Randi was providing care for a patient, and
    providing care for patients is exactly what hospitals do. Thus, at first blush, it seems
    apparent that this is exactly the kind of situation the statutory definition of employer was
    intended to cover. As will be seen, notwithstanding Plaintiff’s efforts to argue otherwise,
    what seems to plainly follow from the authorities just discussed dictates the outcome of
    this ruling in favor of Defendant.
    Nonetheless, Plaintiffs argue that material issues of fact remain regarding whether
    the statutory definition of employer applies here because: (1) the Hospital is a nonprofit
    institution, and nonprofits cannot be statutory employers; (2) the Hospital uses so many
    independent contractors that it should not be considered the operator of the hospital but
    instead should be considered the mere landlord of a “hub” in which others operate their
    various businesses; and (3) the Hospital cannot rely on the exclusivity provision of the
    Workers’ Compensation Act because its contract with Access Nurses contained an
    indemnification clause.
    3
    (1) Nonprofit Status
    Plaintiffs first argue that the Hospital cannot be a statutory employer because it is
    a nonprofit institution, and a nonprofit institution cannot be a statutory employer. In
    support of this argument, Plaintiffs cite a line of cases dating back to Packett v.
    Moretown Creamery Co., 
    91 Vt. 97
    , 
    99 A. 638
    (1917), in which the Court framed the
    statutory employer test to require the statutory employer to be operating a business for
    “pecuniary gain.” 
    See 99 A. at 640
    . Plaintiffs’ argument suffers from several
    shortcomings, however.
    First, a close reading of Packett shows that the “pecuniary gain” language is taken
    directly from an earlier version of the statutory definition of employment. 
    See 99 A. at 639
    (“The term ‘employment’ is defined, in the case of private employers, as including
    employment only in a trade or occupation which is carried on by the employer for the
    sake of pecuniary gain. Section 58(e).”). Not only does the present version of the
    statutory definition of employment omit this “pecuniary gain” language, but it contains
    language explicitly including employment by nonprofit institutions. See 21 V.S.A. §
    601(4). It is true that the “pecuniary gain” language from Packett was picked up and
    quoted in a 1984 case, King v. Snide, 
    144 Vt. 395
    , 401-02 (1984), which was after the
    codification of workers compensation law changed and the “pecuniary gain” language
    was omitted. However, the outcome in King turned on the absence of any business being
    carried on at all, not on the absence of a profit-making motive for the claimed business.
    Thus, the “pecuniary gain” language in King in 1984 was essentially dicta; it does not
    appear again in any of the later cases involving statutory employment. The Court thus
    concludes that the “pecuniary gain” language referenced in Packett is of no present
    4
    effect in Vermont, much less that it prevents all nonprofits from being statutory
    employers.
    Furthermore, even in Idaho, one of the few jurisdictions where the statutory
    provision defining employment still explicitly includes the “pecuniary gain” requirement,
    the Idaho Supreme Court has clarified that this “pecuniary gain” requirement does not
    turn on the non-profit status of the enterprise, and is satisfied if the business is providing
    goods or services in return for remuneration. See Burrow v. Caldwell Treasure Valley
    Rodeo, Inc., 
    931 P.2d 1193
    , 1194 (Idaho 1997). Here, despite the Hospital’s nonprofit
    status, it is in the business of providing health care services in return for remuneration.
    Thus, even if the Court assumed that a statutory employer in Vermont is required to be in
    business for “pecuniary gain,” it would conclude that such a requirement would not
    categorically exclude all nonprofits and would not exclude the Hospital in this case.
    It follows that Plaintiffs cannot avoid summary judgment on this ground.
    (2) Hospital is merely a landlord, not an operator
    Plaintiffs also contend that the Hospital uses so many independent contractors that
    it is no longer the operator of a hospital, but simply a landlord owning property where
    others provide medical care. The Court has already rejected this theory in its ruling
    denying Plaintiff’s motion to compel disclosure of all Defendant’s contracts with
    independent contractors in 2007; see Order on Plaintiffs’ Motion to Compel issued June
    23, 2011. No further analysis is necessary here. In essence, the Court concluded as a
    matter of law that use of a large number of independent contractors cannot alone give rise
    to a logical inference that the Hospital is not in fact operating the hospital.
    5
    (3) Indemnification Agreement in Contract Between Hospital and Access Nurses
    Lastly, Plaintiffs cite Hamelin v. Simpson Paper (Vermont) Co., 
    167 Vt. 17
    (1997) and Stamp Tech, Inc. v. Lydall/Thermal Acoustical, Inc., 
    2009 VT 91
    to argue for
    “a limited exception to statutory employer immunity” where the direct employer and the
    statutory employer have entered into an indemnification agreement. Neither of these
    cases is remotely similar to this one, however, and they afford no support for Plaintiffs’
    position.
    In Hamelin, a security company provided security services for a paper
    manufacturer under a contract providing that the security company would indemnify the
    paper manufacturer against any claims arising from its provision of security services.
    While patrolling, one of the security company’s guards fell through some weak stairs on
    the paper manufacturer’s premises. The injured guard collected workers’ compensation
    benefits through the security company, and then sued the paper manufacturer for
    negligence in maintaining its premises. After notifying the security company and its
    insurer, the paper manufacturer settled the claim in good faith, leaving only the third-
    party claim by the paper manufacturer against the security company to enforce the
    indemnity clause. Thus, the decision in Hamelin was about the applicability and
    enforceability of the indemnification clause, and the arguments focused on (1) whether
    the parties intended the indemnification clause to cover an injured security worker’s
    negligence-based claim, and (2) even if intended, whether it would violate public policy
    to allow indemnification against a claim based on the indemnitee’s own negligence under
    these circumstances. 
    See 167 Vt. at 18-20
    . Whether the paper company was the security
    6
    guard’s statutory employer was not raised or discussed at all; and it clearly was not a
    statutory employer, since the paper manufacturer was not in the security business.1
    Like Hamelin, Stamp Tech was not about statutory employer immunity, but was
    instead about the enforceability of a contractual indemnification clause. In Stamp Tech, a
    contractor was hired by a manufacturing plant to install safety devices on an industrial
    press, pursuant to a contract in which the manufacturing plant agreed to indemnify the
    contractor against any claims arising from performance of the contract. An injured
    worker had sued the contractor for negligence, and following notice to the manufacturing
    plant, the contractor settled with the worker. The contractor was judgment proof, and in
    return for the employee’s agreement not to press his claim against it, it assigned its
    indemnification claim against the manufacturing plant to the employee. The employee
    then sought to collect from the manufacturing plant, his employer, based primarily on the
    indemnification clause. The trial court felt the settlement with the judgment proof
    contractor was collusive, concluded as a matter of law that there was insufficient proof
    that the contractor was at fault, and granted the manufacturing plant/employer’s motion
    for summary judgment on the indemnification claim. 
    2009 VT 91
    , ¶ 8. The Supreme
    Court reversed, ruling that questions of fact relevant to the good faith of the settlement
    and the contractor’s fault remained. 
    Id. at ¶¶
    1, 14-17. It is apparent from this summary
    that no one in Stamp Tech is even arguably a statutory employer. It is true that there was
    a second issue involving a claim by the worker that the exclusivity provision should not
    1
    The closest Hamelin came to peripherally touching on the statutory-employer issue was a brief reference
    to another contract term in which the parties had tried to provide employer immunity to the paper
    manufacturer by deeming the guards its “special employees.” 
    See 167 Vt. at 20
    . The security company
    had unsuccessfully suggested that the inclusion of this term made the parties’ intent that the
    indemnification clause cover injured workers’ claims ambiguous, see 
    id., but there
    was no explicit
    argument or discussion regarding whether the paper company was the security guard’s statutory employer,
    or any effect that determination might have had on the analysis.
    7
    apply because the employer’s wrongdoing rose to the level of an intentional tort, but this
    exception based on intent clearly has no pertinence here.
    Thus, these cases do not support an exception to statutory employer immunity
    where the direct employer and the statutory employer have entered into an indemnity
    agreement. Such an exception is neither logical or reasonable, as a contract between the
    two potentially liable employers can only establish rights and obligations with respect to
    each other, not with respect to injured workers, which are governed by law.
    Summary and Conclusion
    The Hospital is in the business of providing care to patients. Randi Kubit was
    working at the Hospital as a nurse, providing care to patients, through an independent
    contractor hired by the Hospital. This is exactly the type of situation the statutory
    employer provision was intended to cover, and Plaintiffs’ arguments for not applying the
    exclusivity rule here fail as a matter of law. The Court therefore concludes that no issues
    of material fact remain, and the Hospital is entitled to summary judgment.
    ORDER
    WHEREFORE it is hereby ORDERED: The Hospital’s motion for summary
    judgment is GRANTED.
    Dated at Newfane, Vermont, this ____ day of August, 2011.
    ________________________
    John P. Wesley
    Presiding Judge
    8
    

Document Info

Docket Number: 363

Filed Date: 8/4/2011

Precedential Status: Precedential

Modified Date: 4/24/2018