Who Pays My Workers’ Compensation Claim If My Employer Is Sold to Another Company?
Just about every Iowa employer is required to carry workers’ compensation insurance. This is supposed to ensure that injured employees have access to medical benefits and compensation for lost wages in the event of a work-related accident. Unfortunately, sometimes it’s not entirely clear who owns a given employer, especially if the corporate entity has been sold or filed for bankruptcy. So where does this leave employees struggling to collect their workers’ compensation benefits?
Court Rules Laser Tag Company Not Liable for Workers’ Compensation Judgment
The Iowa Court of Appeals recently addressed such a case. The plaintiff worked for a company that operated a laser tag facility in Des Moines. She suffered a work-related injury in January 2014, which led to a concussion diagnosis. The plaintiff also suffered a number of additional impairments related to the injury, including “anxiety, depression, and interrupted sleep-wake cycles.”
What should have been a straightforward workers’ compensation case was complicated, however, by the plaintiff’s inability to sort out who was actually responsible for the laser tag facility. The facility itself operated under the name AKA Tactical Laser Tag, LLC. But around the time of the plaintiff’s injury, the facility was “rebranded” under the name CMP Tactical Lazer Tag.
The plaintiff filed her workers’ compensation claim against CMP, believing that entity to be her employer. Later, she also served a claim against AKA’s corporate address in Wisconsin. AKA denied the plaintiff was its employee. Meanwhile, CMP did not answer or respond to the Iowa workers’ compensation claim. An arbitrator for the Workers’ Compensation Commission eventually entered a default judgment against CMP, ordering it to pay “workers’ compensation benefits, interest, medical expenses, costs, and penalty benefits” to the plaintiff.
But obtaining a judgment is not the same thing as getting the defendant to pay. The plaintiff proved unable to locate any CMP assets to collect the money owed to her. She did, however, locate a building in Des Moines owned by AKA and another corporate entity, Escape Chambers.
The plaintiff subsequently attempted to levy assets from the building in satisfaction of her judgment. She maintained AKA and Escape Chambers were actually “related” to CMP and therefore liable for her judgment against it. Following a hearing, however, the trial court rejected the plaintiff’s efforts and ruled the judgment against CMP did not apply to AKA, Escape Chambers, or its Des Moines property.
The Court of Appeals agreed with the trial judge. As the appeals court explained in its judgment, the plaintiff failed to submit “any evidence to indicate that CMP has common owners or interests with AKA or Escape Chambers.” The plaintiff’s theory was that AKA was sold, or merged with, CMP. But even if that were the case–and AKA disputed this–under Iowa law when a business is sold the corporate successor “is typically not liable for the transferring corporation’s debts and liabilities,” unless there is evidence of fraud or the successor is a “mere continuation” of the seller’s business. The Court of Appeals said neither of these exceptions applied to the known facts of this case.
Speak with a Southeast Iowa Workers’ Compensation Lawyer Today
As the above case illustrates, sorting out legal responsibility for a workers’ compensation claim can require more effort than you might think. That is why you should always work with an experienced Iowa workers’ compensation attorney who will fight to make sure you receive the money you deserve. Contact the Noyes Law Office P.C. if you have been injured at work and require immediate legal advice and assistance.