Workers' Compensation: Workers' Compensation Insurance: Intentional Wrong?

Employers' liability insurance policies generally exclude coverage for "intentional wrongs" committed against employees, even if those employees also pursue workers' compensation claims.

Michael Bunting was severely injured on the job when a baler broke and fell on his foot. He initially received $138,000 through his employer, Emil A. Schroth Inc.'s workers' compensation insurance with New Jersey Manufacturers Insurance Company (NJM).

However, Bunting sought further compensation, alleging his injury was due to Schroth's "gross negligence and intentional wrongdoing," claiming Schroth knew the baler was damaged and unsafe. Bunting and Schroth reached a consent judgment for $1,250,000. As part of the agreement, Schroth assigned its rights to Bunting to pursue coverage from its general liability insurers: NJM, Great Northern Insurance Company, and Chubb Insurance Company of New Jersey. These insurers had denied defense and indemnity coverage for Bunting's accident.

The insurers filed motions to dismiss, arguing their policies' Exclusion C5 and EII endorsement provisions precluded coverage. Exclusion C5 explicitly excludes coverage for "bodily injury intentionally caused or aggravated by [Schroth]". The EII endorsement further clarifies this, excluding "any and all intentional wrongs within the exception allowed by N.J.S.A. 34:15-8 including but not limited to bodily injury caused or aggravated by an intentional wrong committed by [Schroth] or [Schroth's] employees, or bodily injury resulting from an act or omission by [Schroth] or [Schroth's] employees, which is substantially certain to result in injury".

The motion judge granted the insurers' dismissal, reasoning that Exclusion C5 did not violate public policy. The judge stated that allowing coverage for intentional wrongs would increase "moral hazard" and prevent employers from facing consequences for intentionally disregarding employee safety.

This decision was affirmed on appeal, relying upon the New Jersey Supreme Court's ruling in Rodriguez v. Shelbourne Spring, LLC. The Rodriguez case involved identical policy exclusions and held that "Laidlow claims of intentional wrongdoing are expressly excluded under the plain language of the [employer's liability insurance] policy exclusions". The Court also explicitly ruled that these exclusions do not violate public policy.

"We also conclude Bunting's contention that the exclusionary provisions in Schroth's insurance policy violate public policy is without merit as Rodriguez expressly ruled that the exclusions at issue do not violate public policy. The Court held the "challenged intentional wrong exclusions," the same exclusions challenged here, "are not against public policy." Judge English got it right." [Citations omitted]

Therefore, the insurers were not obligated to provide coverage for Bunting's claims of intentional wrongdoing.

MAKAYLA BUNTING, ETC. VS. EMIL A. SCHROTH, INC., ET AL. A-1972-23 (NJ App Div 2025) Decided May 16, 2025

UNPUBLISHED OPINION. CHECK COURT RULES BEFORE CITING.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This opinion shall not “constitute precedent or be binding upon any court.” Although it is posted on the internet, it is binding only on the parties involved in the case, and its use in other cases is limited. R. 1:36-3. Superior Court of New Jersey, Appellate Division.

Related Resources

NJ Supreme Court Limits Employer Insurance Coverage for Worker Injuries 12/13/2024

Recommended Citation: Gelman, Jon, Workers' Compensation: Intentional Wrong?, www.gelmans.com (05/22/2025)

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ORDER NOW

*Jon L. Gelman of Wayne, NJ, is the author of NJ Workers' Compensation Law (West-Thomson-Reuters) and co-author of the national treatise Modern Workers' Compensation Law (West-Thomson-Reuters). For over five decades, the Law Offices of Jon Gelman 1.973.696.7900
jon@gelmans.com has represented injured workers and their families who have suffered occupational illnesses and diseases.