Four Cases to Watch at the Texas Supreme Court
Four significant workers’ compensation cases are currently pending at the Texas Supreme Court. The cases rest at different stages of the appellate process. Moreover, each appeal deals with separate and important workers’ compensation issues: whether the deadline to file suit for judicial review is a statute of limitations or a jurisdictional prohibition; how co-employment is created in a controlled insurance program context; and whether the fee guidelines apply to air ambulance bills.
The Supreme Court has granted review in the judicial review case and arguments have already taken place. Briefing is completed or ongoing in the remaining cases, but the Court has not yet decided whether to hear any of those cases.
Summaries of the issues involved in each case can be found below.
In Texas Mutual Ins. Co.v. Chicas, Cause No. 17-0501, the issue is whether the deadline to file suit for judicial review in a workers’ compensation case is a jurisdictional deadline or a statute of limitations. The intermediate courts of appeals are divided in their answer to this question. Most of those courts have concluded that the issue is one of jurisdiction. But one earlier decision decided otherwise, reasoning that the defense is one of limitations. The Court of Appeals in Chicas agreed with this earlier decision.
Both lines of cases rely upon the reasoning of a 17-year-old, non-WC case, called Dubai Petroleum Co. v. Kazi. In Dubai, the Texas Supreme Court partially overruled a very old (1926) case, Mingus v. Wadley, which was a workers’ compensation case. Mingus has been cited for decades for the proposition that the failure of a party to satisfy a statutory prerequisite, such as timely filing a suit for judicial review, is a jurisdictional defect that could be raised at any stage of the proceedings.
Jurisdictional arguments can be raised by a party at any stage of the proceedings (even, for the first time, on appeal). They may be challenged through the extraordinary writ of a petition for writ of mandamus. Defenses based on the statute of limitations must be raised in the pleadings and decided based on a motion for summary judgment.
The Supreme Court heard arguments in the case on January 22, 2019.
The issue in Berkel & Company Contractors Inc. v. Tyler Lee and Leigh Ann Lee, Cause No. 18-0309, is whether the defendants had established a valid contractor controlled insurance program (CCIP) which precluded an injured employee of a general contractor from suing a subcontractor for injuries allegedly caused by the negligence of an employee of the sub. The court of appeals found that the CCIP validly made the plaintiff a statutory employee of both the general and the sub and, therefore the court applied the exclusive remedy provision of the Texas Workers’ Compensation Act (§ 408.001) to bar the plaintiffs’ recovery. This resulted in a reversal of a judgment that awarded the plaintiffs $39,895,905.52. Instead, the court rendered a take nothing judgment.
The opinion of the court of appeals also contains an interesting discussion regarding the intentional tort exception to the comp bar.
We hold that injury was substantially certain only for someone in the fall path of the leads, and there is no evidence that Miller knew what that fall path would be. Without such evidence, a reasonable factfinder could not determine that Miller knew that his conduct was substantially certain to bring about harm to Lee as “someone within a small class of potential victims within a localized area.” See Restatement (Third) of Torts: Phys. & Emot. Harm § 1 cmt. e. At best, a reasonable factfinder could only determine that Miller knowingly created a risk of injury, which is insufficient to support liability under the intentional-injury exception. See Restatement (Third) of Torts: Phys. & Emot. Harm § 1 cmt. c, illus. 4 (providing that the substantial-certainty test is not satisfied when the actor merely knows that his conduct produces “a significant likelihood that someone will suffer physical harm”).
Business Insurance and WCI360 both analyzed the effect of the opinion, and quoted one of the employer’s appellate attorneys, Thomas C. Wright, who discussed the implications of the court’s resolution of the “intentional injury” issue in the case:
Thomas C. Wright, a partner with Wright & Close, LLP, that represented Berkel, said the decision clarifies what allows an injured worker to be exempted from the Texas Workers’ Compensation Act, according to BusinessInsurance.com.
“In its very thorough opinion, the appellate court found that ‘intentional injury’ requires an intent to injure a particular person or a small class of people, not just a general knowledge that an activity is dangerous,” Wright said, according to BusinessInsurance.com. “Many plaintiffs attempt this way around the Workers’ Compensation Act, and this case should bring some clarity to the law.”
The Supreme Court has not yet decided whether to grant the petition for review in this case.
In Flextronics America LLC et al. v. Halferty, Cause No. 18-0258, an employee of a subcontractor was injured on Flextronics’ job site and received workers’ compensation benefits from the carrier that covered the job. The employee sued Flextronics, the general contractor, arguing that one of its employees had negligently caused the employee’s injuries. The trial court concluded that the plaintiff’s exclusive remedy was to receive workers’ compensation benefits and dismissed the suit. The court of appeals reversed the judgment, arguing that Flextronics had not “provided” workers’ compensation coverage within the meaning of the Act and, therefore, was not entitled to the exclusive remedy defense.
The Supreme Court has not yet decided whether to grant the petition for review in this case.
Finally, in Texas Mutual Ins. Co. v. PHI Air Medical, LLC, Cause No. 18-0216, the court is considering whether the Airline Deregulation Act preempts state law that imposes a fee schedule on health care that is rendered in compensable claims. The air ambulance providers argue that the fee guidelines are precluded; the insurance carriers argue that no such preclusion was intended by Congress, but if it is imposed, the ADA is “reverse-preempted” by the McCarran-Ferguson Act, which commits the regulation of the business of insurance to the States and preempts the Federal government from interfering in those regulatory systems.
The Supreme Court has not yet decided whether to grant the petition for review in this case.
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