Georgia court considers whether staffing agency or insurer should pay workers' compensation claims

Two cases before the Georgia Court of Appeals in early December 2023 involved injured workers hired through temporary employment agencies. In both cases, the temporary employment agency's workers' compensation insurance carrier went bankrupt. Image credit: Andrii Yalanskyi/Adobe Stock

The Georgia Insurer's Insolvency Pool (GIIP), a safety net for employees with workers' compensation claims in cases where the carrier becomes insolvent, filed appeals in two cases with the Georgia Court of Appeals in early December 2023.

At the heart of these disputes were disagreements about who the employers of the two plaintiffs were at the time of the accidents. Both were employed through temporary employment agencies by an insurer that went bankrupt, and both worked for companies belonging to different insurers.

The question boils down to whether these temporary workers were technically employees of the companies to which they were loaned under the borrowed servant doctrine for workers' compensation claims, as the GIIP argues, or whether they were employees of the temporary employment agencies that hired them. If the latter is true, the GIIP is responsible for paying workers' compensation claims and vice versa.

According to GIIP, the issue will have “serious and far-reaching consequences” for Georgia workers because it will determine whether similarly situated workers can receive workers' compensation benefits. In addition, the decision “overrides the long-established principle that the state board will move up the liability scale to prevent an injured worker from being left without benefits.”

Whitney Arp of Gorby Peters, arguing for the GIIP, said the borrowed servant doctrine allows for a three-step test to determine which insurer is responsible for the claims:

  • Whether the “special representative” or the company to which the temporary worker was contracted had complete authority to give instructions and control over the “temporary worker” or temporary worker.
  • It remains to be seen whether the “General Manager” or the temporary employment agency had such control.
  • Whether the “special master” had the sole right to dismiss the employee.

Lexi West of Eraclides Gelman, arguing for the respondent Carpet Cycle, gave three reasons why the GIIP should be responsible for settling the claims:

  • The Superior Court did not err in applying the “every evidence” standard to the findings of fact of the Appellate Division of the State Board of Workers' Compensation.
  • Even if the appeals court rules that the high court erred in applying the “any evidence” standard, there is still no legal theory that the pool can use to prove that its client is subject to workers' compensation under the law, and in turn, the pool cannot seek compensation or reimbursement.
  • Even if the appellate court were to conclude that her client was entitled to workers' compensation benefits, the GIIP applied the law in a manner that violated her client's due process rights.

Judge Elizabeth Gobeil asked what cases supported the parties' positions, focusing particularly on recent cases on the Borrowed Servant Doctrine and the Court of Appeals' authority to rule on the issue. She particularly examined the interpretation of the third prong.

Seth Martin of Speed ​​​​Seta Martin Trivett Stubley & Fickling, representing appellant Zep, argued: “The Supreme Court judge's order actually specifically mentioned the third point and said that this deadline had not been met.”

However, according to Arp, there is an exception for staffing firms, and “the special agent's authority to dismiss must relate only to the temporary assignment.” Arp said the courts have held that it is irrelevant whether the employee was always under the control of a special agent, and that one must focus on the specific occasion on which the injury occurred, as opposed to the general employment relationship. To that end, “the statement uncontestedly found that [the appellee company] had complete control over the work being performed at the time of the injury.”

The appellants also pointed out that “opposing counsel talks about literally every other moment except the moment of injury,” while the respondents pointed out that the case has now been heard in six different courts and they have so far prevailed.

Martin said that if the appeals court does indeed rule in favor of the GIIP, it should not affirm the decision but send the case back to the lower court.

The cases in question are Georgia Insurers Insolvency Pool v. Carpet Cycle, No. A24A0103, Carpet Cycle v. Georgia Insurers Insolvency Pool, No. A24A0211, and Georgia Insurers Insolvency Pool v. Zep, No. A24A0287, in the Georgia Court of Appeals.