In Rhiner v. Red Shield Insurance Co., issued May 27, 2009, the Oregon Court of Appeals addressed the issue of whether an individual whom an insured hired directly, and who filed a workers’ compensation claim against the insured for on-the-job injuries is an “employee” or a “temporary worker” within the meaning of the policy. The appeals court reversed the trial court’s grant of summary judgment in favor of the insured, and remanded for entry of judgment for insurer holding that because the insured hired the individual directly, and not with the aid of a third party, the individual was not a “temporary worker” within the meaning of the policy, and the policy did not provide coverage of his claims against the insured.

The policy defines “employee” to include a “leased worker,” but not to include a “temporary worker.” “Temporary worker” is defined as “a person who is furnished to you to substitute for a permanent ‘employee’ on leave or to meet seasonal or short-term workload conditions.”

The insured contended that the policy definition of “temporary worker” is ambiguous as it could be read to apply to any person who was hired to meet seasonal or short-term workload conditions, regardless of who furnished the worker. The insured also contended that the policy is unclear as to whether the worker may “furnish” himself. In addition, the insured contended that the record supported that the individual was hired to meet short-term workload needs.

Employing Oregon’s rules to interpret the terms of an insurance contract, the Oregon Court of Appeals found that the policy’s definition of “temporary worker” plainly and unambiguously provided that a temporary worker is “a person who is furnished to you” either to substitute for a permanent employee or to meet seasonal or short-term workload conditions. The court then turned to the question of the meaning of “a person who is furnished to you,” and whether it encompasses an individual who plaintiff hired directly and whether a person can “furnish” himself or herself to an employer. As the policy does not define “furnished,” the court looked to the plain meaning of the term. Utilizing Webster’s Third New Int’l Dictionary, the court found that, in the context of human labor, the definition of “furnish” could conceivably mean that a person could provide or supply himself or herself to an employer. The court found, however, that ambiguity is not determined by what a single word in a policy means in the abstract, but what that term most likely was intended to mean when viewed in the context in which the term is used in the policy as a whole.

The court held that the insured’s proposed reading of the term “furnished” becomes untenable in the context of the whole policy because it renders the entire phrase “a person furnished to you” superfluous. Oregon courts do not lightly assume that contract language is superfluous in determining whether a phrase is ambiguous. For that reason, the court concluded that the phrase “a person who is furnished to you” as used in the definition of temporary worker means a person who is referred from, or provided by, a third party. Because the insured hired the individual directly and not with the aid of a third party, he was not a “temporary worker” within the meaning of the policy, and coverage of his claims against the insured is excluded.

In so holding, the Court of Appeals affirmed Oregon’s rules to interpret the terms of an insurance contract, and confirmed that when determining whether a term is ambiguous the issue is not what a single word in a policy means in the abstract, but what that term most likely was intended to mean when viewed in the context in which the term is used in the policy as a whole.