Royal Insurance, v. R & R Drywall and Tennessee Department of Commerce and Insurance

A workers' compensation insurance carrier assessed a retrospective premium increase of over $60,000 against a contractor after auditing the company's books and finding evidence that its subcontractors employed more workers than the contractor had declared. The contractor filed an administrative appeal of the assessment, arguing that the additional workers were not actually employees of its subcontractors, but members of de facto partnerships, and thus not covered under the contractor's policy. The administrative law judge agreed, and found that the contractor was not liable for the additional premium. The Chancery Court of Davidson County reversed the administrative law judge, finding that the insurance company was entitled to the additional premium, because it had borne the risk of liability to those workers for on-the-job injuries. We affirm the Chancery Court.