Massachusetts Appeals Court holds that short-term can be of indefinite duration

My last post discussed Central Mut. Ins. Co. v. True Plastics, Inc., 84 Mass. App. Ct. 17 (2013), in which the Massachusetts Appeals Court addressed whether Sanchez, an employee of a staffing agency, was a temporary employee or a leased worker of the company to which she was assigned, True Plastics, Inc.  If she was a leased worker then, as discussed in my last post, the liability policy issued to True Plastics by Central Mutual would not provide coverage.  If she was a temporary worker, however, the policy would provide coverage.  

The policy defined "temporary worker" as a person furnished to meet "short-term workload conditions."  The policy did not define short-term workload conditions. 

In a decision that invites insurance fraud, the court held that the only consideration in determining whether a person was furnished to meet short-term workload conditions is what the employer intended at the time the worker was hired.  "Even if a worker's assignment ends up being lengthy, he or she will still be a 'temporary worker' within the meaning of the policy, provided the insured held an objectively reasonable expectation at the time that the worker was furnished [that the worker was hired] to meet a short-term workload condition. 

Central Mutual argued that "short-term" workload conditions cannot be indefinite.  The court disagreed, and held that a short-term workload condition need not be of finite duration. 

The court held that True Plastics had met its burden of proving that Sanchez was furnished to meet a short-term increase in its workload. 

Massachusetts Appeals Court provides guidance on burdens of proof

I posted here about the Massachusetts Superior Court decision in Central Mut. Ins. Co. v. True Plastics, Inc., 2009 WL 2603151.  In that case the Superior Court held that whether or not a worker was a leased worker, in which case there would be no insurance coverage pursuant to a general liability policy, or a temporary worker, in which case there would be coverage, was a disputed issue of fact.  It denied summary judgment to both sides. 

Sanchez was injured while working on the premises of True Plastics, the insured. She was an employee of Dynamic Staffing, Inc., a company in the business of placing its employees at client companies.

After that decision the case went to trial as a "case stated," which essentially means that stipulations and agreed-upon evidence was submitted to the judge for a decision.  The judge ruled in favor of True Plastics.  Central Mutual appealed.  In Central Mut. Ins. Co. v. True Plastics, Inc., 84 Mass. App. Ct. 17 (2013), because of the procedural posture the Massachusetts Appeals Court gave no deference to the trial judge's findings.

The court noted that the definition of "employee" that was referenced in the employer's liability exclusion had two parts.  The definition stated that leased workers are employees (and therefore excluded from coverage under the employer liability exclusion).  "Because this provision expands the universe of persons excluded from coverage, the insurer has the burden of proving that a person falls within its scope." 

The definition of "employee" excluded from its definition temporary workers.  Read in the context of the employer liability exclusion, temporary workers were an exception to the exclusion.  True Plastics therefore had the burden of proof that Sanchez was a temporary worker. 

The court thereby touched on a thorny problem. While it is axiomatic that an insured has the burden of proving that coverage is triggered, the insurer has the burden of proving that an exclusion applies, and the insured has the burden of proving that an exception to an exclusion applies, frequently the policy clause that determines coverage is not found in an exclusion or an exception, but a clause that may be "exclusion-like" or "exception-like" (my terms).  Or sometimes a coverage clause is phrased in such a way that certain occurrences are not exactly "excluded" from coverage, but are left out of the definition of coverage.

Although the issue the court was dealing with here was more straightforward, its analysis is phrased in such a way as to help with the harder issues:  An insured has the burden of proof on a policy clause that expands coverage, whether that clause is in an insuring clause,  an exception to an exclusion, or elsewhere the policy.   An insurer has the burden of proof on a policy clause that contracts coverage, whether that clause is in an exclusion or elsewhere.