Indiana Supreme Court: ‘Value’ of Work Includes More Than Money Paid

by: Colin E. Flora

      This week, the Indiana Supreme Court handed down a decision that I have been looking forward to since the case was argued. In a short but powerful opinion, the court resolved a dispute about the meaning of the word “value” in the Indiana Worker’s Compensation Act. Ultimately, the court decided that “value” means what you think it means–i.e. the common, Webster’s Dictionary definition of the word. Consequently, the decision expands the field of persons subject to the Indiana Worker’s Compensation Act beyond what some might have previously expected.

      The case, Young v. Hood’s Gardens, Inc., stems from fairly simple facts. Jason Young was an employee of a tree removal business. The business was contracted to remove a “large tree” at Hood’s Gardens. In exchange for the removal, Hood’s Gardens agreed to pay $600 and allowed the tree removal business to keep the wood from the tree. While removing the tree, Young was severely injured and rendered a paraplegic.

      The dispute in the case turns on whether Hood’s Gardens has secondary liability under the Indiana Worker’s Compensation Act for Young’s injuries. Typically, a person who is injured on the job by the negligence of a third-party can seek recovery both under the Worker’s Compensation Act and through a lawsuit against the third-party. For example, a truck driver who is injured while making a delivery for his employer when a negligent driver blasts through a red light can seek recovery both under the Indiana Worker’s Compensation Act as against his employer and against the negligent driver in a regular court proceeding. What makes this case different is twofold. First, there was no allegation that Hood’s Gardens was negligent and caused Young’s injuries. And second, Hood’s Gardens was not a remote third-party. Young’s employer was contracted by Hood’s Gardens. This triggered an often-overlooked portion of the Worker’s Compensation Act.

      As the court summarized:

The Indiana’s Worker’s Compensation Act, specifically Indiana Code section 22-3-2-14(b), “imposes on a person who hires a contractor without verifying that the contractor carries worker’s compensation insurance liability to the same extent as the contractor for the injury or death of any of the contractor’s employees”—but only if the value of the work exceeds $1,000:

[A]ny corporation, limited liability company, partnership, or person, contracting for the performance of any work exceeding one thousand dollars ($1,000) in value by a contractor subject to the compensation provisions of IC 22-3-2 through IC 22-3-6, without exacting from such contractor a certificate from the worker’s compensation board showing that such contractor has complied with section 5 of this chapter, IC 22-3-5-1, and IC 22-3-5-2, shall be liable to the same extent as the contractor for compensation, physician’s fees, hospital fees, nurse’s charges, and burial expenses on account of the injury or death of any employee of such contractor, due to an accident arising out of and in the course of the performance of the work covered by such contract.

      Before you panic, thinking that you may have exposed yourself to secondary liability every time you’ve hired someone to do more than $1,000 worth of work on your home, bear in mind that subsection (a) specifically excludes both owners “who contract[ ] for performance of work on the owner’s owner occupied residential property[,]” and nonprofit corporations. Mind you, the residential property exception requires the contractor to be the owner and that the owner occupies the property as a residential property. So, if you are hiring someone to roof your rental property, it looks like you need to be mindful of the workers compensation requirements as that does not appear to be exempted.

      The issue in this case turned on a single word: “value.” As you’ll note, the statute only applies to “work exceeding one thousand ($1,000) in value.” Here, the only money paid was $600. Thus, the issue is simply whether the cost of the wood could be considered in deciding whether the “value” of the work was more than $1,000. In the trial court, the judge concluded that “value” does not include the worth of the wood and granted summary judgment to Hood’s Gardens. On appeal, the divided (2-1) Indiana Court of Appeals agreed with the trial court. Specifically, the majority, adopting the definition in the ninth edition of Black’s Law Dictionary, determined: “‘Value’ means ‘[t]he monetary worth or price of something; the amount of goods, services, or money that something commands in an exchange.’” The Indiana Supreme Court exercised its discretionary review and granted transfer to consider the issue.

      Writing for the unanimous court, Justice Brent Dickson wasted no time in informing us of the court’s decision: “We hold that the $1,000 monetary threshold may include the ascertainable value of ancillary consideration received by the contractor.” In short, the worth of the wood is included in the definition of “value.” In reaching that point, the court first notes the arguments of the parties. Of course, Young urged that value includes the worth of the wood. Hood’s Gardens argued that the court “should interpret the statute to focus on the contract price only, adding that any additional benefit the contractor might have realized from salvaging the wood is extra-contractual in nature and not considered by the parties at the time the contract was formed and that the value of services is determined by the benefit conferred on the business only.”

      The first step of the court’s analysis was to look at the language of the statute and determine whether there was an ambiguity. If the text of a statute is plain and unambiguous, then the court must apply the statute as written. Where, however, the statute is subject to the interpretation of a provision that can be interpreted by two reasonable persons in two different ways, then the court must resolve that ambiguity and fix a meaning that is in keeping with the text as a whole and intended purpose of the statute. Here, the court concluded that “value” was ambiguous in this statute.

      In resolving the ambiguity, the court looked to prior decisions in which the Indiana Supreme Court has recognized that Indiana’s Workers Compensation Act “is a humane enactment designed and intended for the protection of workmen who come within its provisions, which are and ought to be liberally construed and applied, so as to extend that protection to the ultimate good of the greatest possible number of our workers; but the extent and limitation of its applicability also are fixed by those provisions and we cannot, by judicial pronouncement, enlarge these beyond the very obvious intent of the Legislature . . . .” Adhering to that guidance, the court determined that “value” is most appropriately harmonized within the Workers Compensation Act as a whole when it is interpreted to include “both direct monetary payment as well as any ancillary considerations received by the employer for the work.”

      Further guiding the court’s resolution of the ambiguity were two definitions contained in common dictionaries: Webster’s Third New International Dictionary and The American Heritage Dictionary. Webster’s defines “value” as “the amount of a commodity, service, or medium of exchange that is the equivalent of something else.” Buttressing this definition is the first provided by The American Heritage: “[a]n amount considered to be a suitable equivalent for something else; a fair price or return for goods or services.” Applying these definitions, the court reversed summary judgment and sent the case back to the trial court to move the case toward trial.

      An interesting takeaway from this case is the ongoing battle between where to go when you need a definition. As a practitioner, I have long utilized three sources for definitions. First, and foremost, I grab my copy of West’s Words and Phrases to see if the term has been previously defined in caselaw. If that fails, I next turn to my copy of Black’s Law Dictionary. Should Black’s Law fail to provide a relevant definition, as a last resort, I turn to my American Heritage Dictionary. This decision would seem to suggest, at least as the Indiana Supreme Court is concerned, I should more quickly reach for my American Heritage Dictionary.

      Join us again next time for further discussion of developments in the law.

Sources

*Disclaimer: The author is licensed to practice in the state of Indiana. The information contained above is provided for informational purposes only and should not be construed as legal advice on any subject matter. Laws vary by state and region. Furthermore, the law is constantly changing. Thus, the information above may no longer be accurate at this time. No reader of this content, clients or otherwise, should act or refrain from acting on the basis of any content included herein without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue.