An Indiana-based contractor who did work in Kentucky but failed to disclose the out-of-state business to its workers’ compensation insurer is on the hook for a workplace injury, a federal appeals court ruled Tuesday, upholding a lower court ruling.
Custom Mechanical Construction Inc. of Evansville, Indiana, was insured with Accident Fund Insurance Co. of America at the time of the workplace accident, after which the worker, who fell and sustained serious injuries, filed a workers’ compensation claim. Schultheis Insurance Agency and agent Lee Sublett obtained the insurance for CMC, but Schultheis failed to inform the Accident Fund that CMC was doing business in Kentucky, according to Accident Fund Insurance Co. of America v. Custom Mechanical Construction Inc. et. al, filed with the US 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 was doing work in Kentucky until the accident at the center of this litigation, but it is undisputed that CMC completed work in Kentucky over the years,”; according to the ruling.
The Accident Fund filed suit in federal court seeking a declaration that its policy does not cover the claim. The district court announced judgment in favor of the Accident Fund. In deciding whether CMC’s insurance with the Accident Fund covers workers’ compensation claims for workers injured outside of Indiana, the appeals court affirmed, because “CMC undisputedly never notified AFICA that it had work (or began work) in Kentucky.”