- Defending Against Darcon: The Policy Language is Controlling
- May 29, 2018 | Author: Rina E. Lee
- Law Firm: Goldberg Segalla LLP - New York Office
In 2011, the Board Panel issued a decision in Employer: Darcon Construction (2011 NY Wrk comp G0223167), which contained one throwaway line that has been causing confusion at the hearing level ever since. In this case, a specific work site was covered by a wrap up policy. The Board Panel found that no discrete accident occurred at the work site, therefore, the proper carrier was the carrier of the general employer’s workers’ compensation policy. Wrap up policies refer to such owner or carrier controlled policies written to cover claims arising from one specific work site. The theory behind the assertion that wrap up policies should not be found liable was that an occupational disease was not an accident per se, but a disease that occurred over time; thus, the employer’s traditional policy should be found to cover the occupational disease. Carriers have been using this case to argue that as a matter of law their wrap up policy cannot be found liable where an occupational disease is being claimed without further analysis of the policies in question.This reasoning is flawed for several reasons. Before addressing the recent decisions that speak to the issue, it is important to note that liability for occupational diseases is found with the employer at which claimant was last exposed under WCL Section 44-bb (see Matter of Hutchinson v Lansing Conduit Corp., 68 AD3d 1362 (2009). Further, WCL Section 38 states disablement resulting from an occupational disease is treated as the happening of an accident (see Matter of Andres v Occidental Chem., 43 AD3d 1245 (2007).On August 15, 2017 the Board issued a decision in Employer: JD Consulting LLC, 2017 WL 3668074 (N.Y.Work.Comp.Bd.), noting that while the carrier relied on Darcon in asserting a wrap up carrier cannot be the liable carrier on a claim involving occupational disease, there were recent cases that found wrap up carriers to be liable for an occupational disease. The Board Panel found the wrap up carrier to be liable.On September 1, 2017, the Board issued a decision in Employer: Michaels Corporation finding the wrap up carrier to be liable for an occupational disease. 2017 WL 4087863 (N.Y.Work.Comp.Bd.). In doing so, the Board cited to both Matter of Tutor Perini Building Corp. and Employer: JD Consulting LLC, discussed above though noting that Darcon has not been expressly disavowed. There was no discussion of the policies at issue.On September 28, 2017, the Board issued a decision in Employer: L & L Painting Co, Inc., that did discuss the policies at issue. 2017 WL 4587230 (N.Y.Work.Comp.Bd.). The general carrier’s policy contained an endorsement which noted that no premium charges would be made for operations at an excluded location, which was covered by a wrap up policy. The general carrier provided the proper wrap up carrier’s name and policy number. Since the claimant last worked at a site which specifically covered by a wrap up policy and the general policy excluded coverage for that site, the Board found the proper carrier to be the wrap up carrier.On November 30, 2017, the Board issued a simple decision in Employer: Frontier-Kemper Constructors, 2017 WL 6349604 (N.Y.Work.Comp.Bd.). In this decision, the carrier conceded that it had a wrap up policy that covered the employer on the date of disability. Because the claimant last worked at the site covered by the wrap up policy, and the carrier made no assertion that it did not provide wrap up policy coverage, the proper carrier was found to be the wrap up carrier. It does not appear that the general carrier was ever even placed on notice. Further, the Board cited to WCL Section 49-bb in finding liability for the carrier that covered the last employer and noted that Darcon did not involve a hearing loss as it did in this case.Lastly, on December 29, 2017, the Board issued its most recent decision on this issue in Employer: Jacobson & Co., 2017 WL 8682997 (N.Y.Work.Comp.Bd.). Here, it is noted that the wrap up carrier’s policy specifically covered the location at which the claimant last worked. The general carrier was also on notice. The Board again cited to both Matter of Tutor Perini Building Corp. and Employer: JD Consulting LLC. In this case, the Board cited to these prior decisions to note that while the decision in Darcon has not been disavowed, it is not instructive as there are more recent decisions that do not follow the Darcon decision. The Board expressly noted that coverage is found against the carrier that has a policy in effect on the date of disability though that policy may not have been in place at the time the claimant was last exposed (See Matter of Mlodozeniec, 66 AD3d 1174 (2009)). Thus, the Board rescinded the finding of proper carrier and restored the matter back to the calendar for the parties to produce all policies in effect at the time of the date of disablement.The recent decisions in 2017 show that the Darcon decision was never meant to be followed as a bright line rule. It is clear that the Board is moving away from the Darcon decision. Liability cannot be found against the general carrier for occupational diseases as a matter of law without considering the actual policies and the language of the policies themselves. Coverage is a contractual obligation. Where the language of the general policy for the employer contains an endorsement excluding coverage for claims arising from work performed at a specifically named site or excluding coverage for claims that would otherwise be covered by wrap up policies, and there is coverage by a wrap up for the site at which claimant last worked, coverage should be properly found against the wrap up carrier. Liability should not be shifted to the general carrier based on the idea that no discrete accident occurred at a site covered by a wrap up policy where the policies in question have already contemplated how coverage should apply. Therefore, as the general carrier defending against a wrap up carrier invoking the Darcon decision, it will be crucial to produce the general policy showing the exclusion of coverage for work done at sites covered by wrap up policies as well as any other supporting documentation showing the intent of the parties as to coverage. It is equally prudent to demand that the wrap up carrier produce its policy as well as the Certificate of Liability and OCIP or CCIP Manual, which typically show the policy limits for injuries arising from accident or disease.