Texas High Court Decision Reaffirms Bar Against Policyholder Negligence Claims

January 31, 2012

In a decision that workers’ compensation experts say is good for Texas employees and employers alike, the Supreme Court of Texas issued a unanimous opinion on January 27, 2012, that bars negligence claims against policyholders. The Port Elevator-Brownsville v. Casados case reversed a previous judgment from the Corpus Christi Court of Appeals and rendered judgment for Port Elevator.

The Supreme Court upheld Texas’ main legal tenet that employers cannot, intentionally or unintentionally, split their workforce to leave some employees uninsured. The court’s opinion states that a key purpose of the rule against split workforces is that employees know whether they have the protections of workers’ compensation coverage.

“This decision is great for Texas workers because it assures them that they will be covered, and it reinforces a longstanding workers’ compensation rule,” Mary Barrow Nichols, general counsel and senior vice president for Texas Mutual, said. “This straightforward ruling from the Texas Supreme Court is also positive for Texas employers, because it strengthens the exclusive remedy protection given to workers’ compensation policyholders.”

Previously, the court of appeals awarded nearly $3 million in damages to the family of a temporary worker who died on the job at Port Elevator.

Texas Mutual provided workers’ compensation insurance for Port Elevator, and the temporary staffing company had workers’ compensation through another insurance company.

The plaintiffs claimed that Port Elevator intended to and did exclude the worker from its workers’ compensation coverage on various theories rejected by the court.

The court held that an employee may have more than one employer, and each employer who has workers’ compensation insurance is entitled to the exclusive remedy as a bar to claims about the injury.

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