Must a Self-Insurance Fund Cover Injuries from Workplace Fistfights?

black-calculator-near-ballpoint-pen-on-white-printed-paper-53621-1024x603Businesses face many liability risks or risks of being sued. These include injuries to their employees on the job. Workers’ compensation is designed to address such injuries. In Louisiana, businesses in specific industries may agree to pool together with one another in order to “self-insure” these claims.  This means that the businesses pay the claims from a specific fund rather than handle them through outside insurance companies. The concept of indemnity is important in these sorts of arrangements. Indemnity involves the paying back of money or the defense in court of one party by the other. Of course, money is not unlimited, and organizations providing may exclude certain coverage in particular situations. The business affected may not agree with this.  The Fourth Circuit Court of Appeal recently considered such a dispute.  

Two employees of The Columns Hotel in New Orleans got into a physical altercation while at work.  One of them was injured and sued the hotel and his coworker. As part of this same lawsuit, the Columns Hotel (“the hotel”) brought in the Louisiana Restaurant Association Self-Insurers Fund.  The hotel claimed that the indemnity agreement between the parties should have applied in this situation. The fund disagreed, filing for summary judgment to have the court dismiss the claim on the basis that the agreement was not insurance.  The trial court agreed and dismissed these particular claims. The hotel appealed.

The issue for the Fourth Circuit Court of Appeal ultimately dealt with how to interpret the indemnity agreement.  Although the hotel argued that insurance law should apply to this contract, Louisiana law specifically excludes self-insurance organizations from the Louisiana Insurance Code. La. R.S. 23:1195(A)(1).  Thus, the Fourth Circuit looked at the indemnity agreement between the hotel and the fund itself to determine how it should be applied.  Contracts in Louisiana must be interpreted only to determine what the parties intended the terms to mean. La C.C. art 2045 Here, the parties disagreed as to what situations would be excluded from coverage by the fund.  The exclusions the fund relied on were bodily injury, as well as assault and battery. The exception for bodily injury excluded from coverages situations where someone was injured by actions that should have been reasonably expected to cause such an injury.  The court applied this to the fight between the employees. Their actions during the altercation would have been reasonably expected to cause injury. Thus, the Fourth Circuit found that the bodily injury exclusion would have applied. Therefore, the fund had been entitled to summary judgment on that point.    The other exclusion was that of assault and battery. The exclusion includes reference to bodily injury caused by assault and battery. In Louisiana, battery is a “harmful or offensive contact” and assault is any action that would threaten such contact. Lawson v. Straus, 750 So. 2d 234 (La. Ct. App. 1999).  Under these definitions, the fight between the employees would be considered assault and battery.  Thus the agreement would not cover the se bodily injuries. Because these two exclusions applied to the situation, the Fourth Circuit found that summary judgment had been correctly granted.  

The field of workers’ compensation law can be very complicated and confusing at times.  A good lawyer can help to sort through this confusion.

Additional Sources: Bradley Ryan Akers and Eliza Maria Mortz v. The Columns Hotel, Inc., Michael McCormick and * ABC Insurance Company

Written by Berniard Law Firm Blog Writer: Ashley Weaver

Additional Berniard Law Firm Articles on Contract Interpretation :  Second Circuit Case Demonstrates Importance of Proper Contracts; One Three Letter Word in an Insurance Policy Can Have Six Figure Implications