Texas Employer Shows Policy Met State Exclusivity Rules on Worker’s Suit

Case File

Although a worker tried to claim that his Texas employer didn't have the right kind of workers' compensation coverage to satisfy state law in an effort to circumvent the exclusivity remedy defense, evidence showed that there was a policy in place and that the worker received benefits under it.

Case

Lane v. Odle, Inc., 2024 WL 3897109 (Tex. App. 08/22/24)

What Happened?

A worker was injured at work and sued his employer alleging that the employer had been negligent and was a workers' compensation nonsubscriber under the Texas Workers' Compensation Act. The employer argued that the worker had been receiving workers' compensation benefits and raised as affirmative defenses the worker's election of remedies and his exclusive remedy.

The employer based its argument on its coverage under a workers' compensation insurance policy that had been issued to the employer's parent company. The policy listed the employer as an additional named insured and provided benefits to the employer's employees in 40 states, including Texas.

Pursuant to the policy, the insurer paid the worker $92,209.56 in indemnity benefits and $3,330.30 in medical benefits and would continue to pay $705 per week until Nov. 8, 2023.

The worker claimed that although he was receiving out-of-state insurance policy benefits, the employer could not use the exclusive remedy defense because neither the employer nor the parent company was a registered subscriber to the Texas Workers' Compensation Insurance program and the employer did not have evidence that the Texas Department of Insurance had approved the policy.

At trial, the court sided with the employer, prompting the worker to appeal.

Rule of Law

Unlike other states, Texas allows private Texas employers to choose whether to subscribe to workers' compensation insurance, but without such insurance, employers lose the exclusive remedy defense. The Texas Workers' Compensation Act defines "employer" as "a person who makes a contract of hire, employes one or more employees, and has workers' compensation insurance coverage" and defines "workers' compensation insurance coverage" as "an approved insurance policy to secure the payment of compensation."

Workers' Comp 101

Texas law requires an insurance company contracting to provide workers' compensation insurance under the TWCA to write the coverage contract “on a policy and endorsements approved by [the Texas Department of Insurance].” Tex. Lab. Code Ann. § 406.051(a)–(b). TDI is supposed to coordinate with the appropriate agencies of other states to share information regarding an employer who obtains all-states coverage and to ensure that TDI knows about an employer who obtains all-states coverage in another state but who fails to file notice with TDI. Tex. Lab. Code Ann. § 406.053.

What the Court Said

The court affirmed the trial court's grant of summary judgment to the employer noting that the employer established that the worker: 1) was its employee at the time of the work-related injury; and 2) was covered by its workers' compensation insurance policy.

The court pointed out that the employer presented evidence showing workers' compensation insurance coverage that directly referenced Texas and some of Texas's Labor Code provisions as well as contact information for Texas agencies.

Additionally, the worker acknowledged receiving benefits under the policy, and his complaints that there was no evidence that the policy had been approved by Texas or registered with the state presented only potential administrative violations under the TWCA.

The Takeaway

Evidence that a policy is in place and that it is paying benefits to an injured worker may be enough to show that an employer has workers' compensation coverage in place for purposes of the Texas exclusivity remedy rules.

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