Opinion ID: 1377809
Heading Depth: 3
Heading Rank: 2

Heading: Employee Exclusion

Text: A second exclusionary provision relied upon by the trial court was the provision that denied coverage to employees for bodily injury arising out of and in the course of employment by the insured. Numerous tribunals have ruled that an employee exclusion precludes coverage for sexual harassment claims which allege injuries sustained in the course of the victim's employment. See Gates, Hudson & Assocs., Inc. v. Federal Ins. Co., 141 F.3d 500 (4th Cir.1997) (ruling that sexual harassment claim was an injury that fell within employee exclusion language of commercial excess umbrella policy); Cornhill Ins. PLC v. Valsamis, Inc., 106 F.3d 80 (5th Cir.) (holding that broadly-worded employee exclusion precluded coverage for employee's sexual harassment claims against her supervisors), cert. denied, 522 U.S. 1008, 118 S.Ct. 589, 139 L.Ed.2d 425 (1997); Security Indus. Ins. Co. v. Cigna Property & Cas. Co., No. Civ. A 96-2835, 1997 WL 403415, at  (E.D.La. July 16, 1997) (finding coverage barred under employee exclusion for sexual harassment claims as well as negligent failure to take action against harassers, reasoning that alleged injuries incurred at place of employment during the work day and were caused by co-employee or supervisor); Old Republic, 786 F.Supp. at 632, (holding that employee exclusion precluded coverage for sexual harassment and negligence claims which were inextricably intertwined with underlying sexual harassment and discrimination claims). Even where part of the alleged misconduct occurs away from the work premises, courts have nonetheless found that the employee exclusion is applicable. See Meadowbrook, Inc. v. Tower Ins. Co., 559 N.W.2d 411, 420 (Minn.1997) (concluding that three instances of off-premises conduct were directly related to creation of hostile work environment and that sexual harassment claims necessarily fell within exclusion for claims arising out of and during scope of employment because such harassment results in injury to working relationships); but see Maine State Academy of Hair Design, Inc. v. Commercial Union Ins. Co., 699 A.2d 1153, 1157 (Me.1997) (finding duty to defend where complaint averred only that harassment incidents occurred during period of her employment, but not that all of plaintiff's injuries arose out of and in course of her employment and suggesting that non-workplace sexual advances would trigger coverage). Animal Care cites only one decision for its contention that this Court should rule that sexual harassment cases do not arise out of and in the course of employment. [18] In SCI Liquidating Corp. v. Hartford Insurance Co., 272 Ga. 293, 526 S.E.2d 555 (2000), the Georgia Supreme Court, in answering a question certified to it by the Eleventh Circuit, decided to apply workers' compensation precedent concerning the terms arising out of and in the course of employment and determined that sexual harassment cases do not arise out of employment, reasoning that sexual harassment results from  `the willful act of a third person for personal reasons' rather than a work-related condition. Id. at 557 (quoting Murphy v. ARA Servs., Inc., 164 Ga.App. 859, 298 S.E.2d 528, 530 (1982)). We find the logic employed by the dissenting justice in Hartford Insurance to be more convincing: The use of workers' compensation law to guide the interpretation of a contract not involving workers' compensation is inappropriate. Workers' compensation is a state-imposed and regulated system that provides limited benefits to employees who suffer injuries on the job without regard to the traditional principles of tort law. Public policy concerns have led the legislature to mandate that courts interpret the workers' compensation act liberally in order to bring both employers and employees within its coverage, but these concerns have no place in interpreting private contracts. Additionally, the umbrella policy contains a specific exclusion for claims covered by workers' compensation, and it is therefore illogical and redundant to incorporate workers' compensation law into exclusion 16 [employee exclusion]. Id. at 557-58 (Fletcher, J., dissenting) (footnote omitted); see also SCI Liquidating Corp. v. Hartford Fire Ins. Co., 181 F.3d 1210, 1218-19 (11th Cir.1999) (discussing reasons for treating phrase arising out of and in the course of employment differently for workers' compensation and liability insurance purposes and recognizing that other jurisdictions have excluded coverage of sexual harassment claims under an employee exclusion, reasoning that such claims necessarily `arise[ ] out of and in the course of employment'). Finding no sound basis for applying workers' compensation principles to insurance law, we decline to adopt the approach advocated by Animal Care. We also reject Animal Care's contention that the trial court could not rule on the applicability of the employee exclusion given the absence of allegations in the complaint alleging that all of the conduct at issue occurred within the scope and course of Ms. Smith's employment. [19] We conclude that an employee exclusion, which exempts coverage under a liability policy for bodily injury arising in the course of employment, includes claims for sexual harassment by a co-employee since those claims arise out of and in the course of employment. Based on the foregoing, we affirm the decision of the Circuit Court of Ohio County. Affirmed.