Kubit v. Brattleboro Mem’l Hosp., Inc., No. 363-7-1 0 Wmcv (Wesley, J., Aug. 4, 2011) [The text of this Vermont trial court opinion is un official. It has been reformatted from the origina l. The accuracy of the text and the accompanying data included in the Vermont trial cou rt 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 W mcv

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 husban d have sued the Hospital for negligence in maintaining the hospital premises. Th e Court has previously analyzed certain aspects of the claims and defenses of the p arties in denying Plaintiff’s motion to compel discovery by entry issued June 23, 2011. Cur rently pending is the Hospital’s motion for summary judgment, in which it argues tha t it cannot be liable in tort because it was Randi’s statutory employer at the time of the a ccident. 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).2

Although Randi Kubit was working as a nurse at Def endant Hospital at the time of her fall, her actual employer was a company call ed 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’ compensa tion benefits through Access Nurses. The Hospital is a nonprofit institution that provi des medical care and services to patients for a fee. In providing these services, t he Hospital utilizes the services of numerous independent contractors. However, there i s no suggestion that the Hospital actually contracts out the overall management of th e hospital operation, or that the entity that operates the hospital is separate from the ent ity that owns the hospital premises. Under the contract between the Hospital and Access Nurses, the nurses provided by Access Nurses were independent contractors rathe r than Hospital employees, and Access Nurses was required to, and did, provide wor kers’ compensation insurance for them. Additionally, the contract between the Hospi tal 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 e stablishing 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 employe r, 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 operato r’s regular course of business, even if the injured worker is directly employed by an indep endent contractor rather than by the3

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, f ocuses 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 liabil ity 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 ho spital, albeit as the direct employee of an independent contractor. Randi was p roviding care for a patient, and providing care for patients is exactly what hospita ls 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 j ust 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 b ecause: (1) the Hospital is a nonprofit institution, and nonprofits cannot be statutory emp loyers; (2) the Hospital uses so many independent contractors that it should not be consi dered 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 rel y on the exclusivity provision of the Workers’ Compensation Act because its contract with Access Nurses contained an

indemnification clause.4 (1) Nonprofit Status Plaintiffs first argue that the Hospital cannot be a statutory employer because it is a nonprofit institution, and a nonprofit institutio n 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 fra med the statutory employer test to require the statutory em ployer to be operating a business for “pecuniary gain.” See 99 A. at 640. Plaintiffs’ a rgument 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 d efinition 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 c arried on by the employer for the sake of pecuniary gain. Section 58(e).”). Not onl y does the present version of the statutory definition of employment omit this “pecun iary gain” language, but it contains language explicitly including employment by nonprofit instit utions. See 21 V.S.A. § 601(4). It is true that the “pecuniary gain” langu age 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 an d 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-m aking 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 st atutory employment. The Court thus concludes that the “pecuniary gain” language refere nced in Packett is of no present5

effect in Vermont, much less that it prevents all n onprofits from being statutory employers. Furthermore, even in Idaho, one of the few jurisdi ctions where the statutory provision defining employment still explicitly incl udes the “pecuniary gain” requirement, the Idaho Supreme Court has clarified that this “pe cuniary gain” requirement does not turn on the non-profit status of the enterprise, an d 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 th e Hospital’s nonprofit status, it is in the business of providing health c are services in return for remuneration. Thus, even if the Court assumed that a statutory em ployer in Vermont is required to be in business for “pecuniary gain,” it would conclude th at 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 ju dgment 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 sim ply 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 Plain tiffs’ Motion to Compel issued June 23, 2011. No further analysis is necessary here. I n essence, the Court concluded as a matter of law that use of a large number of indepen dent contractors cannot alone give rise to a logical inference that the Hospital is not in fact operating the hospital.6 (3) Indemnification Agreement in Contract Between H ospital 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 indemnifica tion 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 se curity company would indemnify the paper manufacturer against any claims arising from its provision of security services. While patrolling, one of the security company’s gua rds fell through some weak stairs on the paper manufacturer’s premises. The injured gua rd collected workers’ compensation benefits through the security company, and then sue d the paper manufacturer for negligence in maintaining its premises. After noti fying the security company and its insurer, the paper manufacturer settled the claim i n good faith, leaving only the thirdparty claim by the paper manufacturer against the s ecurity company to enforce the indemnity clause. Thus, the decision in Hamelin was about the applicability and enforceability of the indemnification clause, and t he 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, w hether it would violate public policy to allow indemnification against a claim based on t he indemnitee’s own negligence under

these circumstances. See 167 Vt. at 18-20. Whethe r the paper company was the security7

guard’s statutory employer was not raised or discus sed at all; and it clearly was not a statutory employer, since the paper manufacturer wa s 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 i ndemnification clause. In Stamp Tech, a contractor was hired by a manufacturing plant to in stall safety devices on an industrial press, pursuant to a contract in which the manufact uring plant agreed to indemnify the contractor against any claims arising from performa nce 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 hi s claim against it, it assigned its indemnification claim against the manufacturing pla nt 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 m anufacturing plant/employer’s motion for summary judgment on the indemnification claim. 2009 VT 91, ¶ 8. The Supreme Court reversed, ruling that questions of fact relev ant 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-empl oyer issue was a brief reference to another contract term in which the parties had t ried to provide employer immunity to the paper manufacturer by deeming the guards its “special emp loyees.” See 167 Vt. at 20. The security compan y had unsuccessfully suggested that the inclusion of this term made the parties’ intent that the indemnification clause cover injured workers’ claim s ambiguous, see id., but there was no explicit argument or discussion regarding whether the paper company was the security guard’s statutory employe r, or any effect that determination might have had on the analysis.8

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 s tatutory employer immunity where the direct employer and the statutory employe r 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, wh ich 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 Plain tiffs’ 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 entitl ed 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