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E-Bulletin -
2006
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On December 4, 2006 the New Jersey Supreme Court affirmed the appellate courts decision in Beseler v. O’Gorman & Young, 2006 WL 3487125 (and companion case of New Jersey Manufacturers Insurance Company v. Delta Plastics, 2006 WL 3478254). GRSLL&B first issued an alert about the Appellate Division’s decision in Beseler v. O’Gorman & Young, 380 N.J. Super. 193 (2005), in a December 2005 newsletter.
The Supreme Court has now declared that the C.5 exclusion contained in part two coverage of a workers compensation policy is not applicable to claims based upon an allegation that the employee suffered an injury from action by the employer that was substantially certain to cause harm. In Beseler, the employee was injured when a press machine he was working on severed eight of his fingers. Beseler alleged that his employer removed guards and warnings from the press machine. Mr. Beseler’s claim against the employer was that the actions in taking off the guard and warnings was substantially certain to lead to injury. The employee’s claim alleged facts that permitted him to file suit in Superior Court which were outside of the workers compensation exclusivity bar. Beseler, at 2, citing, Laidlow v. Hariton Mach. Inc, 170 N.J. 602, 605 (2002). These types of claims have since come to be known as “Laidlow” claims.
Beseler’s employer sought to have its insurer, NJM, provide a defense for the claims. NJM refused to defend on the basis of the C.5 exclusion which excludes “bodily injury intentionally caused or aggravated by the employer”. The Law Division, Appellate Division and now the Supreme Court have all declared that the C.5 exclusion does not apply and a carrier providing Part Two coverage must defend the “Laidlow” claims.
The Supreme Court cited, with approval, the Appellate Division’s reasoning which distinguished an intended injury caused by an intentional act, from an intentional act substantially certain to result in harm. The Supreme Court decision, however disconcerting, is consistent with other decisions it has rendered defining what is an intentional act for purposes of insurance coverage. See, Cumberland Mutual Fire Insurance Company v. Murphy III, 183 N.J. 344, 346 (2005), (holding that teenager shooting a BB gun at a car was not an intentional act of the kind that would permit an insurer to exclude coverage.). It is also, unfortunately for insurers, consistent with the Court’s long history of expanding coverage by ruling against insurers and in favor of insureds.
In order to exclude coverage for Laidlow claims, the C.5 exclusion will need to be amended to exclude coverage for actions by the employer that were substantially certain to cause harm.
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