Court Finds ROCIP Contractor Protected by Exclusive Remedy Doctrine
The Beaumont court of appeals has affirmed the dismissal of an employee’s suit against a general contractor based on the exclusive remedy doctrine. The plaintiff was the employee of a contractor who was participating in a Rolling Owner Controlled Insurance Program. He sued the general contractor, arguing that the general was negligent and that the exclusive remedy doctrine did not apply to the facts of his case. The case is Palmer v. Newtron Beaumont, LLC, 09-15-00248-CV (Tex. App.—Beaumont, February 18, 2016).
Palmer, an employee of Motiva, filed a personal injury action against Newtron for injuries Palmer sustained at Motiva on September 26, 2013, “when a Newtron employee stepped on him while descending from scaffolding.” Newtron filed a traditional motion for summary judgment, in which it asserted that Newtron and Motiva entered into a Procurement Agreement for Services under which Motiva provided workers’ compensation insurance and employer’s liability insurance through a RCIP for Newtron and its employees working at the Motiva Plant in Port Arthur, Texas. Motiva’s RCIP also provided insurance coverage for all of Motiva’s employees—including Palmer. By operation of Texas law, and a result of the RCIP, Newtron was Motiva’s “deemed employee,” and thus Plaintiff’s fellow employee, for purposes of the Texas Workers’ Compensation Act, rendering it immune from the recovery of workers’ compensation benefits.
In his response to the motion for summary judgment, Palmer claimed that Newtron was not Palmer’s “employer” under the TWCA and Newton’s negligent employee was not Palmer’s fellow employee. Palmer cited TIC Energy and Chemical Inc. v. Martin, No. 13-14-00278-CV, 2015 WL 127777 (Tex. App.—Corpus Christi Jan. 8, 2015, pet. granted), in which the Corpus Christi Court of Appeals concluded that when a subcontractor enters into an agreement under both sections 406.122(a), (b) and 406.123(a), (e) of the Texas Labor Code, the two sections irreconcilably conflict. A petition for review was granted in TIC Energy by the Texas Supreme Court and the case was argued to the full court on February 9, 2016.
The issue in Palmer and TIC Energy is whether sections 406.122(a), (b) and 406.123(a), (e) are in irreconcilable conflict, thus precluding the application of the exclusive remedy doctrine. The Beaumont Court holds that the two provisions can be harmonized.
The exclusive remedy provision of the TWCA states as follows: “Recovery of workers’ compensation benefits is the exclusive remedy of an employee covered by workers’ compensation insurance coverage or a legal beneficiary against the employer or an agent or employee of the employer for the death of or a work-related injury sustained by the employee.” Tex. Labor Code Ann. § 408.001(a) (West 2015). Section 406.123 of the TWCA “allows general contractors and subcontractors to enter into written agreements ‘under which the general contractor provides workers’ compensation insurance coverage to the subcontractor and the employees of the subcontractor.’” Becon Const. Co. v. Alonso, 444 S.W.3d 824, 829 (Tex. App.—Beaumont 2014, pet. denied) (quoting Tex. Labor Code Ann. § 406.123(a)). When a general contractor and a subcontractor enter into such a written agreement, the general contractor becomes the employer of the subcontractor and the subcontractor’s employees. Tex. Labor Code Ann. § 406.123(e).
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Palmer argues that (1) section 406.123(e) conflicts with section 406.122(b), (2) the requirements of section 406.122(b) are satisfied in this case, and (3) the trial court therefore erred by granting summary judgment. We disagree.
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As discussed above, section 406.122(b) states that a subcontractor and its employees are not employees of the general contractor if the subcontractor is operating as an independent contractor and has entered into a written agreement with the general contractor that demonstrates that the subcontractor has assumed the responsibilities of an employer. Tex. Labor Code Ann. § 406.122(b). Section 406.122 is entitled “Status as Employee[.]” Id. On the other hand, section 406.123 permits general contractors and subcontractors to enter into written agreements, pursuant to which the general contractor agrees to provide workers’ compensation insurance coverage to the subcontractor and the subcontractor’s employees. Id. § 406.123(a); see also Becon Constr. Co., 444 S.W.3d at 829. When the parties enter into such an agreement, the general contractor becomes the employer of the subcontractor and the subcontractor’s employees. Tex. Labor Code Ann. § 406.123(e).
Applying the principles of statutory construction discussed above, we conclude that sections 406.122(b) and 406.123(a) do not conflict; rather, section 406.122(b) addresses the relationship between a general contractor and subcontractor under the act generally, while section 406.123 contemplates the specific circumstance when the general contractor and subcontractor elect to provide coverage by entering into a written agreement under which the general contractor agrees to provide workers’ compensation insurance coverage to the subcontractor’s employees. See Tex. Gov’t Code Ann. § 311.026(a); Wilkins, 47 S.W.3d at 493; Martinez, 836 S.W.2d at 333; Reed, 820 S.W.2d at 2; Barr, 562 S.W.2d at 849.
Accordingly, the court affirmed the dismissal of the case against the general contractor, based on the exclusive remedy doctrine. We anticipate that the Texas Supreme Court will decide the issues presented in TIC Energy before the end of August 2016.
FOLIO
