Exclusive Remedy Defense Bars $40 Million Judgment in CCIP Case
The 14th Court of Appeals has reversed a $40 million injury award for a man whose leg was amputated in an industrial accident, saying his injuries were covered under workers’ compensation. In Berkel & Company Contractors Inc. vs. Tyler Lee and Leigh Ann Lee, No. 14-15-00000-CV, decided July 13, 2017, the court explained that Tyler Lee had been a superintendent for a general contractor on a construction site in Houston. Berkel & Company Contractors Inc. was one of the subcontractors on the site. According to the court’s opinion, one of Berkel’s superintendents, Chris Miller, ordered crane operators to maneuver to free stuck equipment, despite safety concerns from others on the site. As a result of the maneuvers, the crane snapped in half and crashed. Leads on the crane then struck Lee, who was behind a safety barricade, striking him in the leg, crushing it and severing it below the knee.
The court reversed a judgment that awarded the plaintiffs $39,895,905.52. Instead, the court rendered a take nothing judgment. The court concluded that the defendants had established a valid CCIP program, therefore the court of appeals applied the exclusive remedy provision of the Texas Workers’ Compensation Act (§ 408.001) to bar the plaintiffs’ recovery. The court wrote:
Two provisions in the Act govern the employment relationship between general contractors and subcontractors. The first provision establishes the general rule that a subcontractor and its employees are not the employees of the general contractor. See Tex. Lab. Code § 406.122(b). This rule applies only if the subcontractor is operating as an independent contractor and the subcontractor has entered into a written agreement with the general contractor in which the subcontractor has assumed the responsibilities of an employer. Id.
The second provision establishes a permissive exception to the general rule, allowing the general contractor to be deemed the statutory employer of the subcontractor and the subcontractor’s employees “for purposes of the workers’ compensation laws of this state.” Id. § 406.123(e). To create this deemed employer–employee relationship, the Act requires the general contractor and the subcontractor to enter into a written agreement under which the general contractor provides workers’ compensation insurance coverage to the subcontractor and the employees of the subcontractor. Id. § 406.123(a).
The undisputed evidence shows that Skanska, the general contractor and Lee’s actual employer, agreed to provide workers’ compensation insurance to all of its subcontractors and their employees through a contractor-controlled insurance program (CCIP). During the bidding process, Skanska instructed its prospective subcontractors to omit the cost of workers’ compensation insurance, as that coverage would be provided through the CCIP. Once the contracts were awarded, Skanska required all of its subcontractors to enroll in the CCIP as a condition to 10 performing work on the jobsite. Berkel enrolled in the CCIP, and Berkel’s written agreement with Skanska confirms that Skanska provided insurance coverage to Berkel and its employees through the CCIP. Thus, for purposes of the Act, Skanska is Berkel’s statutory employer, and Lee, as Skanska’s actual employee, is Berkel’s statutory co-employee.
As a co-employee, Berkel is entitled to rely on the Act’s exclusive-remedy provision, meaning that the trial court erred by rendering judgment against Berkel on the findings that Berkel was negligent and grossly negligent. See TIC Energy & Chem., Inc. v. Martin, 498 S.W.3d 68, 78 (Tex. 2016) (concluding that the exclusive-remedy provision protected a subcontractor against the common law claims of a general contractor’s employee because the subcontractor qualified as a statutory co-employee, even in the subcontractor’s corporate capacity).
The opinion 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.”
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