Whether the insured was acting within the course and scope of his employment contract was at issue when the Eighth Circuit Circuit reversed the District Court's determination of no workers' compensation coverage in Merriam v. National Union Fire Ins. Co. of Pittsburgh, Pennsylvania, No. 08-3547, 2009 U.S. App. LEXIS 15698 (8th Cir. July 17, 2009).
In 2004, the insured contracted to become a truck driver and independent contractor for Landstar Ranger, an interstate trucking company. The contract required the insured be covered under a workers' compensation policy. Accordingly, the insured secured a Contractor Protection Plan (CPP) from National Union. The policy allowed recovery for occupational accident benefits at $1,000,000 per accident and nonoccupational accident benefits at only $7,500. "Occupational" accident was defined as one which "occurs or arises out of or in the course of the Insured Person performing services within the course and scope of contractual obligations to the Contractee (Landstar)."
The insured was performing a run from Sparks, Nevada to Cedar Rapids, Iowa, when he stopped at his home in Boone, Iowa for a mandatory federal Department of Transportation break. He noticed his gravel driveway had a sinkhole, making it impossible to park his truck. The insured used his own dump truck to lower gravel into the sinkhole. When he was unable to put the bed of the dump truck into neutral, he reached under the truck bed to see whether a cable had caught. The truck bed fell on him, causing serious injury.
Aware the insured was injured while using a personal vehicle, National Union determined the accident was nonoccupational-related and issued benefits of only $7,500. The insured sued for breach of contract and bad faith. The District Court granted summary judgment to National Union. The District Court reasoned that Landstar could not have reasonably foreseen that plaintiff's act of fixing a personal vehicle would fall "within the course and scope" of his contractual duties to haul cargo for Landstar.
The Eighth Circuit disagreed. The insured's decision to take his mandatory break at his home and to fill the sinkhole with gravel so he could park in his driveway could be viewed as attempting to fulfill specific contractual obligations to Landstar. These acts helped ensure the load was delivered with diligence, speed, and care. The insured's actions, therefore, fell within "the course and scope" of his obligations to Landstar under the independent contractor agreement. If the accident occurred as the insured claimed, it was "occupational" as defined by the policy. Therefore, summary judgment was premature.
The Eighth Circuit affirmed dismissal of the bad faith claim, however. National Union engaged in more than a cursory investigation into the claim. The claim was fairly debatable and National Union had an objectively reasonable basis for its denial.
