Court Applies Exclusive Remedy to Preclude Recovery in ROCIP Case

The Corpus Christi Court of Appeals has affirmed a judgment in favor of a gulf coast refinery and its parent company based on the exclusive remedy doctrine. The case, Powell v. Valero Energy Corporation and Valero Refining—Texas, L.P., (No. 13-18-00209-CV) was decided February 28, 2019.

Richard Powell was employed by Qualspec and was assigned to perform inspection work at the Bill Greehey refinery in Corpus Christi. Powell sustained an injury while working at the refinery and sued Valero Energy Corporation (VEC) and Valero Refining—Texas, L.P. for negligence and premises liability. Employees and contractors on the refinery jobsite were provided workers’ compensation coverage through Valero’s Rolling Owner Controlled Insurance Program (ROCIP).

Qualspec signed a multi-site work agreement with the refinery. That agreement required Qualspec to maintain its own workers’ compensation coverage to cover injuries that occurred outside the coverage provided by Valero’s ROCIP. With respect to work performed within the ROCIP, the contract between the refinery and Qualspec provided:

As part of the material consideration for [VRT’s] agreement to enter into this Agreement, [Qualspec] has agreed to participate in the ROCIP program whenever it is available and applicable to any Work, and when Valero has requested that [Qualspec] so participate. To the extent that [Qualspec] participates in ROCIP, [Qualspec] agrees that it will discount its pricing for the Work as appropriate to reflect its insurance savings.

An exhibit to the Agreement further provided that the ROCIP covers “the workers’ compensation losses associated with on site exposures” and “covers enrolled Contractors and Subcontractors of all tiers[.]” Pursuant to the section of the agreement quoted above, VRT elected to provide workers’ compensation coverage to Qualspec and its employees through the ROCIP. Thereafter, Powell, a Qualspec employee, was injured while working as an inspector at the refinery. Powell received benefits under the workers’ compensation policy provided by VRT.

Powell sued VRT and VEC, alleging causes of action for negligence and premises liability. VRT and VEC filed a combined traditional motion for summary judgment based on two arguments. VRT asserted the exclusive remedy defense and VEC argued that it owed no duty to Powell.

VRT argued that it qualified as Powell’s statutory employer under the TWCA because it entered into a written agreement to provide workers’ compensation coverage to Qualspec and its employees. Under TEX. LAB. CODE ANN. § 406.123, a general contractor is deemed the employer of a subcontractor and the subcontractor’s employees if the general contractor provides, in accordance with a written agreement, workers’ compensation insurance coverage to the subcontractor and its employees. Powell argued that VRT did not “provide” workers’ compensation coverage within the meaning of the act because VRT could have required Qualspec to procure its own coverage and because Qualspec was required to discount its pricing for the project to reflect its insurance savings. The court rejected Powell’s arguments.

In determining whether VRT provided coverage by written agreement, we look to the common meaning of “provide.” Halferty v. Flextronics Am., LLC, 545 S.W.3d 708, 713 (Tex. App.—Corpus Christi 2018, pet. filed). “Provide” as it is used in the context of section 406.123(a) of the labor code means “to supply or make available.” MERRIAM WEBSTER’S NINTH NEW COLLEGIATE DICTIONARY 948 (1990); see Flextronics, 545 S.W.3d at 713. We have previously held that a general contractor does not provide coverage simply by requiring its subcontractors to secure their own coverage. Flextronics, 545 S.W.3d at 714. Rather, the general contractor must do something more than pass the onus of obtaining coverage to the subcontractor. Id. It must assure coverage by putting “something in the pot.” Id. at 713. VRT required Qualspec to participate in its ROCIP on qualifying projects, and with respect to Powell, it provided workers’ compensation coverage through the ROCIP. As such, VRT has done more than simply pass the onus of obtaining coverage to a subcontractor.

The court held that VRT was entitled to prevail on its exclusive remedy defense.

VEC argued that it owed no duty to Powell because it did not own or operate the premises where Powell was injured. Duty in the context of premises liability is “commensurate with the right of control.” Control can be demonstrated by ownership, occupation, management, or possession of property. The elements of control can be proven by a contractual agreement assigning a right to control or evidence of actual control.

Powell argued that there existed a fact issue concerning VEC’s right to control the premises because VEC was listed as the project sponsor of the ROCIP. The court disagreed, “while this evidence may speak to some measure of operational control by VEC over its subsidiary VRT, it does not constitute evidence that VEC had the right to control the Refinery where Powell was injured.” In reaching this conclusion, the court focused on the distinction between who had specific control over the safety and security of the premises, rather than the more general right of control over operations.”. The court followed prior case law holding that a right of control over operations of a subsidiary in general is not sufficient to hold a parent corporation liable for torts of the subsidiary.

The judgment of the trial court was affirmed.