[CLC-Discussion] Back charge for failure to maintain work comp insurance?

Thu Mar 17 10:07:20 PDT 2016

Jared:  What about looking outside of the construction law arena at these two concepts:

1.      A contract is unenforceable where it is in furtherance of, or related to, a crime (no workers compensation insurance); or

2.      A statutory provision becoming an implied term of the contract, which was then breached.

I am sure you are mindful of 713.346, Fla. Stat. which could trigger attorney’s fees against your client which might not otherwise exist in the absence of a written contract.

Justin R. Zinzow
Board Certified Construction Specialist
AV Preeminent® Rated Attorney

P: (727) 787-3121
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Construction | Real Estate | Appellate | Business

From: clc-discussion-bounces at lists.flabarrpptl.org [mailto:clc-discussion-bounces at lists.flabarrpptl.org] On Behalf Of George R. Truitt
Sent: Thursday, March 17, 2016 12:31 PM
To: Paul J. Kelly
Cc: clc-discussion at lists.flabarrpptl.org
Subject: Re: [CLC-Discussion] Back charge for failure to maintain work comp insurance?

In the "for what it's worth" category.  I don't think you are entitled to self help, unless your subcontract allows you to withhold cost to cure the insurance issue from future pay apps.  I do think it is a common law material breach entitling your client to damages and excusing any further performance.  But if your client allows the subsub to continue to perform after the breach, it is likely obligated itself to continue to pay the sub sub, with an action for damages flowing from the breach.

Sent from my iPhone

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George R. Truitt, Esq.

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On Mar 17, 2016, at 11:26 AM, Paul J. Kelly <pkelly at paulkellypa.com<mailto:pkelly at paulkellypa.com>> wrote:
Wouldn’t the prime contract require all contractors carry the appropriate coverages and if the coverages are not in place, then the sub who is not carrying the coverage be in breach?

Sincerely,

Paul J. Kelly

Paul J. Kelly, P.A.
2959 First Avenue North
St. Petersburg, Florida 33713
(727) 327-3935
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From: clc-discussion-bounces at lists.flabarrpptl.org<mailto:clc-discussion-bounces at lists.flabarrpptl.org> [mailto:clc-discussion-bounces at lists.flabarrpptl.org] On Behalf Of Smith, Jared
Sent: Thursday, March 17, 2016 11:46 AM
To: Brian Solomon; Fred Dudley; clc-discussion at lists.flabarrpptl.org<mailto:clc-discussion at lists.flabarrpptl.org>
Subject: Re: [CLC-Discussion] Back charge for failure to maintain work comp insurance?

Thanks, Brian.  Great thoughts.  Much appreciated.  The subsub had actually produced a cert. of insurance before starting the job, but let it lapse during the pendency of the project.

Jared E. Smith
Board Certified in Construction Law

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From: Brian Solomon [mailto:bsolomon at solomon-law.com]
Sent: Thursday, March 17, 2016 11:24 AM
To: Fred Dudley; Smith, Jared; clc-discussion at lists.flabarrpptl.org<mailto:clc-discussion at lists.flabarrpptl.org>
Subject: RE: [CLC-Discussion] Back charge for failure to maintain work comp insurance?

First, the subcontractor should have obtained a certificate of insurance prior to the subsub beginning work.  At this point I believe the proper action would be to withhold from the payment the estimated premium based on the total amount of payments made to the subsub. At final audit, the subcontractor will be asked to provide all payments made to subsubs and then to provide certificates of insurance for each.  For the subsub at issue, there will not be a certificate so subcontractor will be charged additional premium based on the total amount of the payments made to the subsub.  By deducting it now, the subcontractor will already have the money to pay the additional premium.  However, letting any subcontractor on a job without first getting a certificate of insurance is a very risky, and well could be, a very expensive proposition.

From: clc-discussion-bounces at lists.flabarrpptl.org<mailto:clc-discussion-bounces at lists.flabarrpptl.org> [mailto:clc-discussion-bounces at lists.flabarrpptl.org] On Behalf Of Fred Dudley
Sent: Wednesday, March 16, 2016 10:28 AM
To: Smith, Jared <jsmith at rumberger.com<mailto:jsmith at rumberger.com>>; clc-discussion at lists.flabarrpptl.org<mailto:clc-discussion at lists.flabarrpptl.org>
Subject: Re: [CLC-Discussion] Back charge for failure to maintain work comp insurance?

This a great  question, Jared, and one for which we need to seek clarification. I’m working on it now with the WC attorney’s I work with on Stop Work Orders and Penalty Assessments, but failure to have required WC coverage is a crime in Florida.

Fred R. Dudley, Partner
Board Certified Construction Lawyer
Dudley, Sellers, Healy & Heath, P. L.
SunTrust Financial Center, Suite 301
3522 Thomasville Road
Tallahassee, Florida 32308
Cell: (850) 294-3471
Direct: (850)692-6368
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From: clc-discussion-bounces at lists.flabarrpptl.org<mailto:clc-discussion-bounces at lists.flabarrpptl.org> [mailto:clc-discussion-bounces at lists.flabarrpptl.org] On Behalf Of Smith, Jared
Sent: Tuesday, March 15, 2016 4:29 PM
To: clc-discussion at lists.flabarrpptl.org<mailto:clc-discussion at lists.flabarrpptl.org>
Subject: [CLC-Discussion] Back charge for failure to maintain work comp insurance?

Can a subcontractor withhold full payment from a subsub that failed to maintain work comp insurance? (in the past, the subcontractor has been audited by its comp carrier and required to pay additional premium for any subsubs that did not have required coverage—significant dollar amounts).  No written contract exists, so for now am making arguments based on custom and industry standard.  Any guidance or discussion appreciated.

Jared E. Smith
Board Certified in Construction Law

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