Court Reverses $17M Judgment Because of OCIP Exclusive Remedy Defense
The First Court of Appeals has reversed the judgment of a trial court that awarded the survivors of a deceased worker more than $17 million after he died during the construction of a footbridge near Baylor University’s McLane Stadium. The decision, Austin Bridge & Road v. Suarez et al., No. 01-16-00682, May 3, 2018, analyzed the OCIP arrangement in place by the contractor, applied the exclusive remedy defense found in § 408.001, and concluded that the employer’s conduct was not grossly negligent, in reaching the court’s decision.
The deceased employee, Dario Suarez, was employed by Derr & Isbell to perform steel work for the building of a bridge across the Brazos River in connection with the construction of Baylor University’s McLane Stadium. On January 28, 2014, Suarez was working on a “man-lift” supported on a barge on the Brazos River. He and his coworker Terry Watson—who was operating the man-lift at the time of the accident—were both wearing safety tethers, or “man-ties,” connecting them to the lift. The lift fell off the barge into the Brazos River. Watson was able to swim to safety, but Suarez was unable to free himself and drowned.
Baylor University, as the owner of the project on which Suarez was killed, had purchased an owner-controlled insurance program that covered all subcontractors and sub-subcontractors, including contractor Austin Bridge as well as a sub-contractor of Austin Bridge, Derr & Isbell Construction, LLC (Suarez’s employer). Suarez’ beneficiaries received death benefits under the OCIP workers’ compensation policy.
The Suarez plaintiffs filed this suit against Austin Bridge, Derr & Isbell, Austin Commercial, among others. With respect to Austin Bridge, the plaintiffs alleged causes of action for negligence and gross negligence. They asserted that Austin Bridge “participated in safety planning, implementation and enforcement for the pedestrian bridge job” and that its actions “constitute[d] negligence which [was] a proximate cause of the incident.” Austin Bridge filed an answer and asserted an “exclusive remedy” affirmative defense, alleging that it was “a member of an Owner Controlled Insurance Program organized under Texas Labor Code 406.123 and as such [is] considered employers of the deceased whose exclusive remedy for negligence is a claim under the Texas Workers Compensation Act, Texas Labor Code 408.001.” The trial court denied Austin Bridge’s summary judgment under the exclusive remedy defense and the case was tried to a jury, which awarded the Suarez plaintiffs $17.75 million in actual and exemplary damages.
The First Court of Appeals reversed the judgment and rendered judgment that the plaintiffs take nothing. In doing so, it first examined whether Austin Bridge had “provided” Derr & Isbell (and its employees) with workers’ compensation coverage under the OCIP plan. The court found that under Texas Supreme Court precedent and precedent from the First Court the evidence was sufficient that Austin Bridge “provided” workers’ compensation insurance to Derr & Isbell and its employees, making Austin Bridge the statutory co-employer or co-employee of Derr & Isbell and its employees. Based on this finding, the court then concluded that Austin was entitled to rely upon the exclusive remedy defense with respect to the Suarez’ actual damages recovery.
The exclusive remedy section of the workers’ compensation act, however, “does not prohibit the recovery of exemplary damages by the surviving spouse or heirs of the body of a deceased employee whose death was caused by an intentional act or omission of the employer or by the employer’s gross negligence.” Accordingly, the court next considered whether Austin’s conduct constituted gross negligence. This analysis focused on whether Austin Bridge was required to ignore a 100% tie off rule for workers on the barge and whether it was required to supply chock blocks or chains to prevent the man lift from falling off the barge. Austin Bridge argued that when viewed objectively, its conduct did not involve an extreme degree of risk to Suarez and that there was no evidence that Austin Bridge subjectively knew about any risk that he disregarded. The court rejected the Suarez’ argument regarding the tie-off rule, writing:
Regarding the Suarezes’ evidence that Beam was grossly negligent in failing to enforce Austin Bridge’s rule not to tie-off when working over water, the evidence demonstrated that numerous safety policies, including OSHA policies, required that workers tie-off one hundred percent of the time that they are working in a setting where the fall would be greater than six feet. Beam’s actions in bringing Austin Bridge’s enforcement of the tie-off policy into conformity with OSHA standards cannot constitute an “extreme degree of risk,” nor can it demonstrate that he acted with conscious disregard of risk. Accordingly, this ground cannot support the jury’s gross negligence finding. See U-Haul, 380 S.W.3d at 137. Indeed, the evidence indicated that the one-hundred percent tie-off policy was designed to prevent serious injury. There was no evidence that either Beam or any other person on the Project considered the possibility that someone would be harmed by using a safety tether in accordance with OSHA guidelines. See id.; see also Boerjan, 436 S.W.3d at 311 (“Under the first, objective element, an extreme risk is not a remote possibility of injury or even a high probability of minor harm, but rather the likelihood of serious injury to the plaintiff.”) (internal quotations omitted).
The court also rejected the plaintiffs’ arguments regarding chaining.
We likewise conclude that the Suarezes’ evidence that Beam failed to enforce the verbal directive from the area manager that the man-lifts be chained down while in use is insufficient to support the jury’s gross negligence finding. Viewed in the light most favorable to the jury’s finding, the evidence indicated that Beam was aware that the written policy of Austin Bridge was that the lifts can be chocked or chained, not both, and he was aware of a verbal directive to keep them chained. He testified that his general practice was to keep them chained, but he himself and other workers would move the lifts around on the barges on occasion, which required that they be unchained. This evidence does not demonstrate that failing to chain the man-lifts posed an extreme risk of harm.
Furthermore, there was no evidence that Beam had actual, subjective awareness of the risk involved on the day of Suarez’s accident and that he nevertheless proceeded with conscious indifference to the rights, safety, or welfare of others. Beam was not present when Suarez’s accident occurred and did not observe Watson’s moving of the lift or Suarez’s efforts in securing the lift in place with the chocks. There was no evidence that any worker had experienced any problems with the safety policy as practiced on the barge—i.e., either chocking or chaining. There was no evidence that any similar accidents or mishaps had occurred during the Project. There was no evidence that Beam knew about the peril to Suarez or someone similarly situated, and there is no evidence of any acts or omissions on Beam’s part indicating that he did not care about any risk to Suarez.
Consequently, a unanimous panel of the court of appeals reversed the trial court’s judgment and rendered judgment in favor of Austin Bridge.
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