Today, November 29, 2005, the Court of Appeals hands down a ruling that affirms an award of Workers’ Compensation survivors’ benefits to the family of a man who was killed in the terrorist attacks of September 11, 2001. The case is Uninsured Employer’s Fund v. Gabriel.

Richard Gabriel was the co-founder of a management consulting firm that was apparently operated out of his home in Virginia and his partner’s home in Massachusetts. Virtually all of the company’s business was conducted on the road, either in airports or in clients’ offices. While on a business trip, Gabriel was killed when the plane on which he was a passenger was hijacked and crashed into the Pentagon.

His widow and two surviving sons filed a claim for survivors’ benefits under the Workers’ Compensation Act. Since the company did not have Workers’ Compensation insurance, the case was defended by the Uninsured Employer’s Fund.

The Fund defended the claim on three grounds. First, it contended that the company did not have three employees in Virginia. In addition to the two principals, the company employed one other person in Virginia and one in Massachusetts; the deputy commissioner found, based on this fact, that the company only had two Virginia employees, and denied benefits. The full commission reversed, determining that the Massachusetts principal, although he seldom came to Virginia, was in effect a Virginia employee. This is because the company was unquestionably a Virginia entity, and the Massachusetts principal was a corporate officer (the secretary), and thus presumptively an employee of the company where it had its corporate existence. The Court of Appeals today affirms this ruling, reasoning that a corporate secretary has duties where the corporation is; since the company paid taxes here, had its registered office here, maintained its financial records here, and had its bank account here, it was a Virginia entity, and the secretary was the threshold third employee.

The second defense was that the death did not arise out of the employment. Today’s panel decision unambiguously affirms the full commission’s determination that this death occurred due to a hazard of travel that Gabriel was subjected to as he transacted business out of the Commonwealth. Since terrorists have been known to target airliners, this was a risk that Gabriel was required to run in furtherance of the company’s affairs.

The Fund’s third defense was a contention that Gabriel had failed to obtain Workers’ Comp insurance, and that this failure was a bar to the claim. The court today adopts the commission’s finding that the evidence did not establish either that Gabriel was solely responsible for procuring the insurance, or that he intentionally failed to obtain it. The partners had met with an insurance agent in 2000 and had discussed the need for various types of insurance. Being advised that they needed such insurance, Gabriel undertook to procure it, and the parties never spoke about it thereafter. There is no information in the opinion as to why Gabriel did not follow through on the undertaking, but the court reasons that in the absence of some proof, the failure to obtain the coverage does not bar this claim. The court thus affirms the commission’s award of survivor’s benefits to Gabriel’s family.

While the court made its ruling based on the facts as found by the commission and the applicable law, without any resort to sympathy for the family, it goes without saying that the Fund occupied a singularly unenviable position in this case. The victims of the terrorist attacks have taken on a status approaching martyrdom, and anyone who would stand in the way of compensation for their deaths will find himself in an uphill battle.

This case is one in which the standard of review was likely dispositive of the case, as the court did not have the luxury to revisit the facts as found by the commission. Of the arguments advanced, it occurs to me that the first is a close call, but the court found that the commission had a satisfactory place to hang its collective hat in ruling that the Massachusetts principal was, insofar as Workers’ Comp law was concerned, a Virginia employee. The second defense seems almost destined to fail from the outset. The third, based on an unpublished Court of Appeals holding from 1991, might have offered some promise, and still might if the Fund applies for an en banc rehearing; the decedent undertook to secure insurance, and then failed to do so. The court distinguishes the 1991 ruling because in the earlier case, the claimant was a sole owner who claimed benefits; his claim was barred because he intentionally failed to get insurance for his company, and no one else could arguably have had the responsibility to buy it. In my view, this is the aspect of this decision that is the most vulnerable, should the Fund wish to pursue the matter further.

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In other decisions handed down today, the court affirms a conviction for child endangerment, where a woman left her two children (ages 2 and 4) alone at home while she went grocery shopping with the apartment door unlocked (Barnes v. Commonwealth); affirms a trial court’s finding that a property settlement agreement was not unconscionable, despite a gross disparity in the distribution (Galloway v. Galloway); and affirms convictions for abduction and firearms charges in an automobile repossession gone awry (Walker v. Commonwealth). The Galloway ruling contains a comprehensive review of the doctrine of unconscionability, and should have application in other areas of the law. The Walker decision contains detailed discussions of the proof requirements for a statutory abduction charge (which differ from the previous common law elements) and of the incidental detention doctrine.