Workman's Comp

Dick-

It's not a matter of who's "right". Texas has created a system, in which Allan must work in order to build houses. If he required all of his subs to carry workers comp because he thought it was the "right" thing to do, he'd either have no subs, or he'd have the few subs in Texas who do have WC (if there's enough to cover all of the trades), and he'd price himself severely out of the market.

As far as "workers rendered penniless by an accident"- in any other state, the builder would get sued, go bankrupt and restart a new company the next week. The client would be next, assuming he had enough assets to make it worthwhile for the lawyers to sue him, and if he did, he'd file bankruptcy as well, keep his house under the homestead laws, and move on with his life. This is all assuming the lawyers felt the case was worth persuing in the first place, and then they'd be the only one's who profited anyway. Johnny Lunchbucket is still paralyzed, and gets taken care of by the state.

So is it "right" for the lawyers to pursue all of these cases if they're the only ones who will profit? I don't think so.

Bob

Lloyd:

Am I worried about winning a civil suit and then losing same suit in a federal court? Absolutely not.

You can’t just lose a lawsuit and then arbitrarily have the plaintiff push it up to federal court. Can’t be done except in the rarest of cases. Very few state civil cases would ever qualify for federal courts. How many people do you know have ever sued someone civilly, lose, then say “I think I will re-sue in federal court”. Even on the very remote chance you could, doesn’t mean you would lose.

I mean let’s just create all these possibilities on how one can be put out of business. Maybe loser could take it to the World Court, or the United Nations, or the EPA, or the Mafia. Good grief let’s get back to reality!

Dick throws out all of these scenarios that honestly sound good on a forum but in the real legal world happen about .0000001% of the time.

I think you have to evaluate your risk and give your attention and resources to the more likely possibilities.

Lloyd & Allan:

The cases can be initially brought in Federal Court, because OSHA violations are Federal law violations, and you can have an OSHA violation if you don't have toilet paper in the Porta Potty, I know I was fined $25 for that in '71, and an OSHA inspector recently told me that is now a $250 violation. Also any case or controversy in excess of $10,000 can be brought in Federal court.

In a Federal case, the court rules on state law claims based on the law of the state it occurred in, but rules on Federal law violations based on Federal law. I have never seen a job site injury that didn't have some kind of OSHA violation involved, usually dozens or more, residential contractors routinely ignore OSHA compliance, ignore it until they get nailed that is.

Bob:

So the very jurors hearing the case are paying for Johnny Lunchbucket’s lifetime care and medical bills, because some millionaire builder didn’t provide insurance coverage?

I think you are wrong about it being easy to take a state case to federal level.

And just because someone is in violation of OSHA rules does not mean it ends up in federal courts, it usually means fines. You are mixing apples and oranges here.

Dick, what percentage of residential contractors that you’ve known or known of in your lifetime have ever lost a civil case in federal court?

Allan:

I've never been involved in one in Federal Court, but I would think if I had a problem in Texas with all the conflicts in laws, I'd try to get it into Federal Court on an OSHA basis. There is an engineer/builder named George Roberts who posts here in some forums, and in the building inspectors' forum, he claims to take building departments to Federal Court all the time, I have questioned him on how his lawyers get these matters into Federal Court, he has never given me a clear answer, but he has to be getting them in under the Claims In Excess of $10,000 jurisdiction, but the Federal Courts don't really like that.

Where I do see construction cases going into Federal Court, is where the builder files for Bankruptcy protection, then the Federal Courts take jurisdiction of everything, In fact it's very hard to get permission from the Bankruptcy courts to move forward with the state claims in State Court.

Dick:

Aren’t bankruptcy cases are always filed in federal courts, I see this as having little relevancy to our debate. In my life I’ve known or known of hundreds of contractors, known dozens that have gone broke, had serious financial problems, health problems, marriage problems, even known 3 that have committed suicide. I’ve never known a contractor who has lost a civil case in federal court and I’ve never heard of a contractor who lost a civil case in federal court. Prioritize your risks and I doubt being sued in federal court would make the top 10 list.

Allan:

Yes, Bankruptcy is a federal court. The relevancy here is if there is an injury, the contractor is found liable for the injury, and the state court renders a judgment that puts the contractor into bankruptcy, it will be moved to federal court. Not too relevant if he files a 7 though, because he's already down the tubes.

The only thing that I could see putting either you or me into bankruptcy is a lawsuit. At this point in our lives, the big danger is losing what we have.

I see my biggest risk in this business as a lawsuit, and maybe that's because I've been there, and the contractor always losses, even if he wins he losses.

*NM*?

Whaddya mean?

Dick:

I totally agree with you that contractors should do everything to stay out of court, we have two strikes against us going in, and I can guarantee 3/4 of the time we will lose even if facts are on our side.

I don’t understand you bringing bankruptcy into the discussion. You have, I believe, been wrong about residential contractor’s exposure to federal civil suits, and I think you know this, and bringing up bankruptcy is a smoke screen. Bankruptcy is a disposition of assets, possibly AS A RESULT of a lawsuit. You have tried to imply that even though I may be protected under Texas civil law that I have some kind of exposure under federal law, this is 99.9999% not going to happen. I will take my chances on the .0001% it might happen. You even bring in OSHA, which is typically, at least in my market, not that involved in residential construction, but even when it is it is on a punitive-fine basis and not a lawsuit basis. Ready to give up?

Allan:

Bankruptcy should have never come into the discussion, I used it as an example of one way that a state case can end up in the Federal courts, but by that time it's too late, who cares how much you are going broke over if you are going broke.

This discussion has dragged on for way too long, you and I both just like a good debate.

You should check with your insurance broker and see if your GL policy will defend you, and pay any damages assessed against you, in the event that an uninsured subcontractor has an injury claim, and an action is brought against you for satisfaction of that claim. Isn't that just being prudent on your part? I know that you have protected yourself as much as possible in most areas, but I think you are leaving yourself wide open relying on a weird Texas law to protect yourself, when that law is being interpreted all over the boards, and a Federal claim could be brought against you by a knowledgeable attorney, Texas lawyers can’t all be that bad.

Where is OSHA in Texas? They come around here all the time, as I related I've been fined for not having toilet paper in the Porta Potty, now there is a new OSHA regulation requiring running water in the Porta Potties so the guys can wash their hands after relieving themselves and the rental companies don’t have it yet (we are responsible for OSHA compliance, not the rental companies, just like we are primarily responsible for safety, not our subcontractors) I don't recall whether that is OSHA or CALOSHA. BTW, we have CALOSHA, which is stricter than OSHA; do you have something comparable in Texas like a TEXOSHA? I was fined by OSHA, not CALOSHA.

Dick:

We either like to debate or we are both hard-headed as hell. I agree with you about the GL, may be some remedies there.

I still think the possibility of a federal lawsuit against a residential contractor is Slim to None, and Slim just left town.

OSHA blew into town about 8 years ago, fined David Weekley Homes $40,000 for scaffold violations, put the fear of God into builders, our local HBA association panicked, kind of blew over after a while.

Allan:

Glad you agree with me on the GL issue, that is probably your protection. When you check on it, be sure to see if your GL carrier has the right of indemnification from you, those bastards can go ahead and settle a claim against you and, depending on the wording in your policy, come back to you for reimbursement. They are wont to do this with well-heeled insureds, saves them money. Check with your broker, we are going to get you protected yet.

You have brought up another good example of the difference between administrative and civil law. OSHA can only fine David Weekley Homes (on serious matters they can bring criminal actions and in the event of deaths they do), but if a workman fell off the scaffolding that was noncompliant, he could make that noncompliance a cause of action in a civil suit, and (this is a big one) we are not insured for our illegal acts, so if we have illegal scaffolding and a man is injured, we are uninsured!

Dick wrote:

“You should check with your insurance broker and see if your GL policy will defend you, and pay any damages assessed against you, in the event that an uninsured subcontractor has an injury claim, and an action is brought against you for satisfaction of that claim.”

“When you check on it, be sure to see if your GL carrier has the right of indemnification from you, those bastards can go ahead and settle a claim against you and, depending on the wording in your policy, come back to you for reimbursement.”

If anyone cannot answer those two questions about their GL coverage it would behoove you to call your agent first thing Monday morning. I know I will.
Excellent Dick and thank you for pointing that out.

Allen Wrote:

“I think you have to evaluate your risk and give your attention and resources to the more likely possibilities.”

Allen, I totally agree with that statement, and one of my biggest concerns is hiring a sub with no WC or a sub that has WC for his employee’s but not for himself. I called my insurance agent yesterday and he told me he can write a policy that will cover any person I hire to include uninsured subs. I will get the finer details of this policy next week.

“This discussion has dragged on for way too long”

Nope, just long enough! :)

I just read the postings today. This discussion hits home in a big way. My boss and I have been trying to figure a way to afford WC here in MO for the last month. The WC rate my boss is paying is $15.20/$100. Not bad really, compared to CA! :) If we make a claim it will probably double, if the insurance co. dosen't drop us.

A friend of ours had a grunt cut the end of his finger off and the bill is over $38,000 so far. He is biting the bullet and paying for it out of pocket because he is afraid his insurance co. will drop him.

My boss wanted to drop WC and provide the guys with health and disability insurance. MO state law say that if you have more than 5 employees or are part of a construction trade you must carry WC. Is this legal in other states?

We are looking for loopholes! Any more increase in WC costs will force us into another line of work!

thanks, johnnyg