Claim background – Pennsylvania Workers Compensation and Employers Liability Policy. There are two entities listed on the policy; both are LLC's, one serving as the manager of the other.

An employee of one LLC is injured and workers compensation benefits are paid. The employee then hires an attorney and files a complaint against the machine manufacturer (not our insured), and initially against the employer, one of the LLCs listed on the policy. An employer's liability claim is submitted to the WC carrier, and initial defense was provided under the first complaint; employer is named but no allegations were made against them. The second amended complaint filed, employer (LLC on the policy), is removed from the complaint and the managing LLC (the second LLC listed on the policy) is named, as well as the owner.

The employer's liability carrier declined further defense because the employee does not work for the managing LLC; he works for the other LLC on the policy and there are no allegations  against the employer since they were removed from the complaint.

Is their interpretation correct, with no defense owed to the managing company under the Part  B coverage?

Kentucky Subscriber

Here's the first requirement of which policy is liable to the employee (if using the standard WC  00 03 form):

  1. The bodily injury must be sustained by an employee included in the group of employees described in the Schedule.

And here's the second:

B. We Will Pay

We will pay an amount equal to the benefits that would be required of you if you and your employees described in the Schedule were subject to the workers compensation law shown in the Schedule. We will pay those amounts to the persons who would be entitled to them under the law.

Both LLCs are involved (one the employee works for directly; the other manages the LLC that the employee works for) and each would be liable for defense under the policy, unless the group of employees are split out specifically between the two LLCs that are insured under the same policy.

What might change this is the particular laws of PA; perhaps there is a law describing LLCs or there is a way to delineate which LLC insures which employees specifically.