Opinion ID: 2100744
Heading Depth: 1
Heading Rank: 6

Heading: willful negligence as defense when employer fails to carry workers' compensation insurance

Text: The appellants argue that because the appellees failed to carry workers' compensation insurance, they could not raise willful negligence as a defense. The appellants' argument depends upon the interaction between Neb.Rev.Stat. §§ 48-102 and 48-103 (Reissue 2004). Section 48-102 provides: In all cases brought under sections 48-101 to 48-108, it shall not be a defense (a) that the employee was negligent, unless it shall also appear that such negligence was willful, or that the employee was in a state of intoxication; (b) that the injury was caused by the negligence of a fellow employee; or (c) that the employee had assumed the risks inherent in, or incidental to, or arising from the failure of the employer to provide and maintain safe premises and suitable appliances, which grounds of defense are hereby abolished. To better understand the purpose of § 48-102, a brief review of the common law before the adoption of the workers' compensation laws might be helpful. Before workers' compensation laws became prevalent in the early 20th century, employees had to resort to common-law negligence actions to recover for injuries arising out of and in the course of employment. But three common-law defenses made it difficult, if not impossible, for injured employees to recover: (1) contributory negligence; (2) the fellow-servant rule, which prevented the employee from recovering if the employee's injury was caused by a fellow employee; and (3) assumption of the risk. See 1 Arthur Larson & Lex K. Larson, Larson's Workers' Compensation Law § 2.03 (2004). Section 48-102 limits the ability of the employer to raise these three defenses in workers' compensation proceedings. Subsection (a) prevents the employer from raising contributory negligence unless the employee was intoxicated or willfully negligent, subsection (b) prevents the employer from raising the fellow-servant rule, and subsection (c) prevents the employer from raising assumption of the risk. Thus, in effect, § 48-102 eliminates the three common-law defenses from workers' compensation proceedings, preserving only the employee's willful negligence and intoxication as defenses which the employer may raise. Section 48-103 provides that when an employer fails to carry workers' compensation insurance or one of its acceptable alternatives, he or she loses the right to interpose the three defenses mentioned in section 48-102 in any action brought against him or her for personal injury or death of an employee. The appellants interpret § 48-103 to mean that when an employer fails to comply with the insurance requirements of the Act, the employer, in addition to not being able to raise the three common-law defenses, also loses the right to raise the two defenses preserved in § 48-102, i.e., willful negligence and intoxication. There are two flaws in the appellants' interpretation of § 48-103 that cannot be reconciled with the language of the statute. First, under the appellants' interpretation of § 48-103, an employer who fails to carry workers' compensation insurance or an acceptable alternative loses the right to interpose only two defenses, willful negligence and intoxication. But construing § 48-103 so that the employer loses two defenses is not consistent with the statute's language; it plainly states that an employer who has failed to carry workers' compensation insurance or an acceptable alternative loses the right to interpose  three defenses.  We are required to give a statutory language its plain and ordinary meaning. See Rodriguez v. Monfort, Inc., 262 Neb. 800, 635 N.W.2d 439 (2001). Construing three defenses to mean two defenses is the antithesis of that rule. Second, the appellants' interpretation overlooks that § 48-102 is not the only section that refers to willful negligence. Three other sections in the Act explicitly make the employee's willful negligence a defense in workers' compensation proceedings. Section 48-101 provides, When personal injury is caused to an employee by accident or occupational disease, arising out of and in the course of employment, such employee shall receive compensation therefor from his or her employer if the employee was not willfully negligent at the time of receiving such injury.  (Emphasis supplied.) Neb.Rev.Stat. § 48-109 (Reissue 2004) provides: If both employer and employee become subject to the Nebraska Workers' Compensation Act, both shall be bound by the schedule of compensation provided in such act, which compensation shall be paid in every case of injury or death caused by accident or occupational disease arising out of and in the course of employment, except accidents caused by or resulting in any degree from the employee's willful negligence as defined in section 48-151. (Emphasis supplied.) Finally, Neb.Rev.Stat. § 48-127 (Reissue 2004) provides, If the employee is injured by reason of his or her intentional willful negligence, or by reason of being in a state of intoxication, neither he or she nor his or her beneficiaries shall receive any compensation under the Nebraska Workers' Compensation Act. (Emphasis supplied.) Section 48-103 mentions none of these other sections. If the Legislature had intended § 48-103 to limit §§ 48-101, 48-109, and 48-127, it would have drafted § 48-103 so that it referred to these three sections in addition to § 48-102. These two flaws lead us to reject the appellants' interpretation of § 48-103. We now turn to the question, What is the correct interpretation of § 48-103? Generally, when an employee suffers an injury arising out of and in the course of employment, the Act provides the employee's exclusive remedy against the employer. Skinner v. Ogallala Pub. Sch. Dist. No. 1, 262 Neb. 387, 631 N.W.2d 510 (2001). This was part of the tradeoff between employers and employees that underlies the Act. Under the Act, injured employees can recover benefits even if the employers' negligence did not cause their injury. See §§ 48-101 and 48-109. See, also, Ray v. School District of Lincoln, 105 Neb. 456, 181 N.W. 140 (1920). In addition, employees can recover benefits, even if the common-law defenses of contributory negligence, the fellow-servant rule, or assumption of the risk would have prevented the employee from recovering damages. § 48-102. See Ray v. School District of Lincoln, supra . In exchange, the compensation that the employee can recover is statutorily set. See § 48-109. This insulates the employer from large damage awards that the employee might have recovered in a common-law action. But, if an employer subject to the Act fails to carry workers' compensation insurance or an acceptable alternative, then the Act is no longer the employee's exclusive remedy. Instead, the employee can elect to either proceed under the Act and recover the statutorily set benefits or seek to recover damages in a common-law action against the employer. See § 48-145(3). Cf. Avre v. Sexton, 110 Neb. 149, 193 N.W. 342 (1923). Of course, if the employer could raise the common-law defenses of contributory negligence, the fellow-servant rule, or assumption of the risk, the employee's election would be of little value. Section 48-103 makes the employee's election meaningful by incorporating § 48-102 into the common-law action. In other words, § 48-103 prevents the employer from raising as defenses to the common-law action the three defenses mentioned in § 48-102, i.e., contributory negligence (unless the employee was intoxicated or willfully negligent), the fellow-servant rule, and assumption of the risk. Thus, § 48-103 provides a powerful incentive for an employer to carry either workers' compensation insurance or an acceptable alternative. If the employer does not, then the injured employee may elect to pursue either a common-law action or workers' compensation proceedings. If the employee chooses the common-law action, not only will the employer be subject to common-law damages, the employer's ability to raise the three common-law defenses most likely to defeat the employee's claim will be cut off.