An Indiana-based contractor who conducted work in Kentucky but failed to disclose the out-of-state operations to its workers compensation insurer is on the hook for a workplace injury, a federal appeals court ruled Tuesday, affirming a lower court decision.
Custom Mechanical Construction Inc. in Evansville, Indiana, had an insurance policy with Accident Fund Insurance Co. of America at the time of the workplace accident, after which the worker, who fell and suffered serious injuries, filed a workers comp claim. Schultheis Insurance Agency and agent Lee Sublett procured the policy for CMC, but Schultheis failed to inform Accident Fund that CMC did business in Kentucky, according to Accident Fund Insurance Co. of America v. Custom Mechanical Construction Inc. et. al, filed in the U.S. 7th Circuit Court of Appeals.
Although most of its jobs are in Indiana, CMC has been registered to do business in Kentucky since 2009. Mr. Sublett has worked with CMC since it opened in 2005 and claimed “he was not aware that CMC performed work in Kentucky until the accident at the center of this litigation, but it is undisputed that CMC completed jobs in Kentucky over the years,” according to the ruling.
Accident Fund filed suit in federal court, seeking a declaration that its policy does not cover the claim. The district court granted summary judgment in favor of Accident Fund. On deciding whether CMC’s insurance policy with Accident Fund covers workers comp claims for workers who are injured outside of Indiana, the appeals court affirmed, as “CMC indisputably never notified AFICA that it had work (or began work) in Kentucky.”
This article was first published in Business Insurance.