Houston Court of Appeals Upholds WC Exclusive Remedy Defense

In a case stemming from a 2019 fire and explosion at ExxonMobil’s Baytown Olefins Plant, the Houston 14th Court of Appeals has reversed a trial court order denying the defendant’s motion for summary judgment based on the exclusive remedy defense.

ExxonMobil Corporation v. Jon Alvarez, et al.; Carlos Burgoin, et al.; and Efrain Flores-Rodriguez, et al. (No. 14-22-00863-CV; No. 14-22-00872-CV; No. 14-23-00013; February 29, 2024) involved personal injury claims asserted by 23 employees of four subcontractors who worked at the Baytown Plant. ExxonMobil moved for summary judgment, asserting the exclusive-remedy defense under the Texas Workers’ Compensation Act. The trial court denied summary judgment and ExxonMobil appealed.

The court of appeals reversed and rendered judgment for ExxonMobil. In order to establish the exclusive-remedy defense, ExxonMobil had to show that (1) the defendant was the plaintiff’s employer within the meaning of the Act, and (2) the defendant subscribed to workers’ compensation insurance. Though not the direct employer, ExxonMobil asserted statutory employer status under Sec. 406.123 of the WC Act, which permits a general contractor to be deemed the employer of a subcontractor’s employees if there is a “written agreement under which the general contractor provides workers’ compensation insurance coverage to the subcontractor and the employees of the subcontractor.” For each of the four subcontractors, ExxonMobil produced a Standard Procurement Agreement (SPA) permitting ExxonMobil to furnish workers’ compensation insurance for the subcontractor’s services performed at the site. ExxonMobil followed up the SPAs with notice to the subcontractors of coverage under ExxonMobil’s OCIP, naming the subcontractors as insureds under the policy.

Plaintiffs asserted the exclusive remedy defense was inapplicable, in part by arguing the SPA and OCIP were executed at different times. The court rejected this argument, holding that nothing in the Act “conditions the exclusive-remedy defense on a particular sequence of documentation,” or that it “requires a written agreement that provides for workers’ compensation insurance coverage.” Plaintiffs further tried to argue that ExxonMobil’s secondary documentation contained discrepancies in contract numbers, which somehow invalidated coverage. The court held that even if the contract numbers changed along the way, it wasn’t material to whether coverage existed. Plaintiffs further asserted that since the SPAs merely gave Exxon the option to provide coverage, they didn’t constitute a written agreement to provide WC coverage. The court cited its own precedent in rejecting that argument. Other arguments, such as that the SPA was invalidated by prior mergers between subcontractors or that ExxonMobil hadn’t proved that it paid premiums for the furnished coverage, were also rejected by the court.

Discussing the sufficiency of ExxonMobil’s proof, the court observed that “the purpose of the Act has always been to provide coverage. See HCBeck, Ltd. v. Rice, 284 S.W.3d 349, 356 (Tex. 2009) (‘First, the ‘object sought to be attained’ has always been simple: to ensure coverage of subcontractors and their employees.’). That purpose would not be advanced if an employer who has already provided coverage had to cancel a preexisting policy and then renew it again every time the employer executed a new written agreement that authorized the provision of coverage.”

Plaintiffs further argued that some members of the plaintiff group had already received WC benefits, while others had not, and thus there was a fact issue as to WC coverage.  The court rejected this argument as well, stating that “ExxonMobil was not required to prove that any of the Plaintiffs had already received benefits. And the evidence that some of the Plaintiffs may have received such benefits does not negate the evidence that all of the Plaintiffs had workers’ compensation insurance coverage.”

The trial court’s orders denying ExxonMobil’s motions for summary judgment were reversed, and judgment was rendered that the Plaintiffs take nothing by their claims against ExxonMobil.