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A decision this year by the Oregon Court of Appeals could significantly impact limited liability companies, according to industry experts.

In February, the appeals court reversed part of a decision by another court in the case of Antonio Cortez v. Nacco Materials Handling Group Inc. The case involved a worker who was injured in a forklift accident and later sued a member of the LLC that employed him.

Traditionally, workers鈥� compensation law protects employer groups from lawsuits through the exclusive remedy provision, which essentially prohibits employees from suing their employers for a workplace injury in exchange for employer-provided workers鈥� compensation insurance. But the appeals court ruled that the exclusive remedy provision did not protect 鈥渕embers鈥� of LLCs from tort liability.

J.L. Wilson, vice president of government affairs for Associated Oregon Industries, said that decision threatens to unravel nearly a century of law.

鈥淓xclusive remedy is the underpinning of the workers鈥� comp system dating back to its inception in (1914),鈥� he said.

Wilson said the basis for the finding is that, while the law protects groups like 鈥渆mployers,鈥� 鈥渙fficers,鈥� 鈥渄irectors鈥� and even fellow 鈥渆mployees鈥� from tort liability, it does not specifically mention LLC 鈥渕embers.鈥� He said the court鈥檚 interpretation was that because the Legislature did not name that group, it must not have intended to protect them.

鈥淭he ramification, as you鈥檝e seen in (the) Cortez (case), is that you can collect benefits on your claim as Cortez did and turn around and sue your employer as well. If you can do that, then really, why have a workers鈥� comp system?鈥�

AOI 鈥� together with a dozen industry trade groups like the Associated General Contractors, the Oregon Home Builders Association and the Oregon Concrete and Aggregate Producers Association 鈥� today will file an amicus brief petitioning the Oregon Supreme Court to review the appeals court鈥檚 decision. Wilson said AOI also will attempt to get the law amended in the next legislative session.

The exclusive remedy provision underwent significant change in 1990 during what was called the Mahonia Hall reforms. Up to that point, contractors had struggled to keep up with high costs related to workplace injuries while laborers had toiled with comparatively low levels of benefits. Then 14 representatives of management and labor groups met in the basement of the governor鈥檚 residence for four months to hammer out a solution.

Prior to a 1.9 percent rise this year, pure premium rates for workers鈥� compensation had not increased in 21 years 鈥� dropping a cumulative 62.8 percent since 1990, according to the Oregon Department of Consumer and Business Services.

John Rakowitz, government affairs director for AGC鈥檚 Oregon-Columbia chapter, said the exclusive remedy provision was a key ingredient in the 1990 reform. He said that if the appeals court鈥檚 decision were left unresolved, it would directly impact the financial and legal security of LLCs 鈥� a large portion of AGC鈥檚 members.

鈥淭he impact if there were not to be a fix would be, really, a direct hit on the contractors in our industry at large, who as you know are already contending with the deepest (and) longest downturn in Oregon construction memory,鈥� Rakowitz said.

But not everyone was so quick to rail at the decision.

Elana Guiney, the legislative and communications director for the AFL-CIO, and a board member of Oregon鈥檚 Management-Labor Advisory Committee, said she would like to see more information on the subject before any changes are made to the workers鈥� comp system.

In recent MLAC meetings, she said workers鈥� compensation lawyers testified that cases similar to Cortez v. Nacco have arisen in the past and that the ability of workers to sue in those situations may actually play an important role in the system. More research, she said, needs to be done to make that judgment.

鈥�(AOI鈥檚) concern is (that) it could undermine the exclusive remedy provision, but I also understand when a business registers as an LLC they鈥檙e doing that to avoid certain liabilities 鈥� that鈥檚 what a limited liability corporation is,鈥� Guiney said. 鈥淚f they鈥檙e trying to avoid certain liabilities, that also means more things are falling to their employees, realistically, with that form of business.鈥�

She said that while workers should not be able to take advantage of loopholes in the system, attention should be paid to the issue to make sure the same is true for owners of LLCs.

鈥淚f there are things in the workers鈥� comp system that are made more difficult at an LLC because that company has less liability in some way,鈥� she said, 鈥渢hen we may need to look at workers鈥� comp in LLCs.鈥�

Robert Udziela, the plaintiff鈥檚 attorney in the appeals case, could not be reached for comment.