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Out Of State Employment And Accident - Jurisdiction In Georgia?

June 02, 2014 BY John Blackmon

           The term “jurisdiction” in a workers’ compensation context frequently means whether the claim has been timely filed.  However, it can also involve the issue of whether the accident, the employer and the claimant have sufficient ties to Georgia thereby allowing benefits to be paid under our laws.  When an individual is employed elsewhere, and suffers an accident outside of this state, one of the questions raised is whether the claim can be filed here.  It has been argued that if the employer has an “all states policy,” the Board automatically has jurisdiction pursuant to OCGA § 34-9-124(a).  That is incorrect, and the answer to the inquiry can be found in OCGA § 34-9-242 and the seminal case of Guinn v. Conwood Corp., 185 Ga. App. 41 (1987). However, and in addition to the legal inquiry, there are some practical aspects that need to be considered as well as dual jurisdiction for those cases which can be filed here but are instead filed in another state.        

            Legal analysis:  OCGA § 34-9-242 provides that “[i]n the event an accident occurs while the employee is employed elsewhere than in this state, which accident would entitle him or his dependents to compensation if it had occurred in this state, the employee or his dependents shall be entitled to compensation if the contract of employment was made in this state and if the employer’s place of business or the residence of the employee is in this state unless the contract of employment was expressly for service exclusively outside of this state.” (Emphasis added).  In almost every case that is litigated, the two issues are (1) where was the contract made and (2) was the contract for work to be performed exclusively outside of Georgia.

            The four elements of a valid contract are an offer, legality, consideration and acceptance.  It is probably safe to say that the vast number of employment agreements are oral, not written.  If acceptance is the act that consummates a contract, then the issues become when that occurred and where.  Was the interview and application process in another state?  Was it done by telephone, facsimile, e-mail, regular mail or overnight mail?  Did the prospective employer need to do an investigation on its end before agreeing to hire the individual?  Was testing required in another state as a condition of employment?  It is a fact intensive inquiry to say the least.  And while on this subject, there is also the question of whether that agreement called for workexclusively in another state.  For those employers who conduct business in many states, and who may have done work in Georgia in the past, there may be a problem.  Most employment agreements do not even address where the work is to be performed and unless it is a fixed location, such as a construction project, an employer which has worked in Georgia in the past may well find itself subject to jurisdiction here simply because of the possibility that it may do work in this state again.  Keep in mind, however, that even if there is a valid argument that Georgia has jurisdiction, there may still be a coverage issue.  Does the insurance policy extend coverage to the employer’s business activities in this state?      

            In Guinn, the court of appeals addressed a situation in which a Georgia resident was hired in Tennessee and was injured in that state but did perform work for his employer in Georgia.  185 Ga. App. 41.  The State Board, relying on the language of Code section 34-9-242, found that Georgia lacked jurisdiction because the employment contract was made in another state.  The superior court affirmed, but the court of appeals reversed, holding that the initial inquiry should have been on the first sentence of OCGA 34-9-242, which reads “employed elsewhere than in this state….”  Id. at 43.  The court noted that “working elsewhere,” as Guinn was doing when injured, was not equivalent to being “employed elsewhere.”  Id. at 46.  It is only when the “principal location” of the employment relationship (and accident) is outside Georgia that the location of the contract is to be considered.  If the principal location of Guinn’s employment was in Georgia, then the place where the contract had been made was irrelevant.         

            In McDonald-Hayes v. Minyard, 69 Ga. App. 479 (1943), the court of appeals held that jurisdiction was proper in Georgia for accident in South Carolina since the employer had a store in Georgia, the employee resided in Georgia, the employment contract was entered into in Georgia and nothing in the employment contract indicated that services were to be performed “exclusively” outside this state.  Compare this result with Cramer v. American Mut. Liability Ins. Co., 77 Ga. App. 236 (1948), in which the court held that jurisdiction was not proper in Georgia because the employee was not a resident of this state, the injury occurred in Arkansas and the employment contract was not made in this state.  This was the case even though the employee’s accident occurred while en route to work on a job in Georgia.

            All states policy:  An all states or multi states workers’ compensation policy is one in which the employer carries workers’ compensation coverage for all or several states.  These policies are especially useful for employers with multiple job sites and employees working in multiple states.  The declarations page states which jurisdictions are covered but do not stop there.  In the body of a standard workers’ compensation policy there is a section that may allow coverage to be extended to states not specifically listed in the declarations page, specifically Part Three – Other States Insurance.  You will need to see the entire policy, including any and all endorsements, to make a final determination about coverage.  Frankly, you need to see the entire underwriting file if coverage becomes an issue.

            Code section 34-9-124(b) provides that when an insurer issues a policy to an employer, it may not deny coverage on the basis that the employer is not subject to the Act.  Stated simply, because the insurer has issued the policy in Georgia, it must pay benefits for a compensable accident.  Given that an all states policy essentially grants coverage for every state, the logical question that follows is whether an injured employee can argue that this code section allows jurisdiction regardless of the required connections to this state as outlined in OCGA § 34-9-242.  It does not.

            In Security Insurance Group v. Plank, 133 Ga. App. 815 (1975), the workers’ compensation insurer denied coverage for a Tennessee employee killed on a job site in Georgia while working for a Tennessee employer.  The employment contract was entered into in Tennessee.  The insurer argued that the employer was not subject to the Act in Georgia because it did not have the requisite amount of employees within the state. The court of appeals disagreed, finding that OCGA § 34-9-124(b) applied because the insurer had issued the employer an all states policy.  As a result, it was estopped from disputing coverage by arguing the employer was not subject to the Act.

            The key to the holding in Plank was that the work accident occurred in Georgia.  The all states policy therefore allowed Georgia to assert jurisdiction.  If the principal location of employment and accident are in another state, then Code section 34-9-242 determines whether Georgia has jurisdiction.  The purpose of OCGA § 34-9-124(b) is not to allow jurisdiction where there is none, but simply to deny the employer the defense of not being subject to the Act when it has fewer than three employees.  By obtaining workers’ compensation coverage, these employers voluntarily subject themselves to the Act, and in exchange obtain the benefit of the exclusive remedy provision, OCGA § 34-9-11.

            Dual coverage/practical considerations:  Unlike some other states, Georgia is not choice of jurisdiction. An individual can file in another state and then bring his or her claim to Georgia at a later date.  If that happens, OCGA § 34-9-242 provides that “nothing contained in this Code section shall be construed so as to permit a total compensation for the same injury greater than is provided for in this chapter.”  In plain speak, that means an insurer or self-insurer get credit for any benefits paid in another state and can apply those payments to our caps.  Of course, it can go the other way as well, so if you settle the Georgia claim, try and find a way to prevent it from be filed in another state.  No reason to pay the same claim twice.  

            There are going to be times when Georgia will have jurisdiction over a claim involving an entity that has no office in this state.  There will be no posted panel and probably no meaningful way of offering suitable employment, both of which are very problematic.  Equally problematic is the situation in which the injured worker lives here but another state’s law applies to his/her claim and quality Georgia physicians refuse to treat because they will not accept that jurisdiction’s fee schedule.  While it would make sense to use the Georgia fee schedule for medical benefits even though it is not a Georgia claim, some employers and insurers buck at this because the claim is being handled under the law of another jurisdiction.  Theoretically the employer/insurer could voluntarily subject themselves to jurisdiction in Georgia, file the claim here and point to the fact that there is an all states policy providing coverage.  But once done, and this assumes the injured worker does not object, it probably could not be “unfiled” after the 60/81 day period so if there are subsequent problems with the panel or suitable employment, the employer and insurer would be stuck with them.  And when considering jurisdiction, determine how a subrogation lien may be affected in the event the injury was caused by a third party.  Suffice it to say, in these situations there are numerous practical aspects that need to be considered before determining where the claim should be filed.

            In sum, if the principal location of the employment and the accident are outside of Georgia, OCGA § 34-9-242 will determine if benefits can be had under our Act.  Code section 34-9-124(b) applies to accidents occurring in Georgia, when the principal location of employment is here or when OCGA § 34-9-242 allows jurisdiction, and when the employer may not otherwise be subject to the Act but has procured workers’ compensation coverage under the laws of this state.  If there is jurisdiction in Georgia under OCGA § 34-9-242, you need to make certain that the workers’ compensation policy extends coverage to insured’s business activities here.  Georgia may have jurisdiction but there may be no insurance coverage.  Even if Georgia technically has no jurisdiction, but there is coverage under the policy, and you feel that it may be best to handle it under the laws of this state, be aware of the downsides.  Though it may benefit an injured worker, it might be used against you once a lawyer gets involved, which brings to mind the old adage of no good deed goes unpunished.  Finally, keep in mind that a claim filed elsewhere may ultimately end up here if Georgia has jurisdiction.

The Journal is a publication for the clients of Drew Eckl & Farnham, LLP. It is written in a general format and is not intended to be legal advice to any specific circumstance. Legal Opinions may vary when based upon subtle factual differences. All rights reserved. 

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