In Becon Const. Co., Inc. v. Alonso,
2014 Tex. App. LEXIS 10765 (Tex. App.—Beaumont, Sept. 25, 2014),
the Texas Court of Appeals was asked to decide whether the
exclusive remedy defense provided by the Texas Workers'
Compensation Act applies on a work site that was subject to a
contractor-controlled insurance program.
Background
In January 2011, Jose Alonso, Miguel Betancourt, Jose
Rodriguez, Luis Guajardo, Alejandro Salinas, and Ricardo Salinas
Jr. (the employees and appellees) were on a scaffold working at
a refinery on a project that involved work that other
contractors and subcontractors were performing when a crane
collapsed. At the time of the collapse, A&L Industrial and
Empire Scaffold were subcontractors on Motiva's project. Both
were subcontractors to Performance Contractors, Inc., and
Performance was working on the project under a contract with
Motiva.
The Motiva/Performance contract obligated Performance to
provide labor and equipment on the project and required
Performance to take directions on the project from the
Bechtel–Jacobs Joint Venture. The various contracts in evidence
reflect that the Bechtel–Jacobs Joint Venture was the contractor
placed in charge of managing the overall project.
The various contracts on the project also included clauses
requiring the various contractors and subcontractors to have
various types of insurance for the project, including a workers
compensation policy that covered their respective employees
while they worked on the project.
The parties didn't dispute that, when the collapse occurred,
Becon Construction and Bechtel Equipment (the subcontractors)
were providing either construction equipment or services for the
project under their respective subcontracts. Under their
respective subcontracts, the subcontractors were indirectly
required to take direction from the Bechtel–Jacobs Joint
Venture, as Performance's contract with Motiva required that
Performance take direction on its work from the Bechtel–Jacobs
Joint Venture.
There was also no dispute that Becon Construction and Bechtel
Equipment were named as insureds on the workers compensation
policy obtained for the project by the Bechtel–Jacobs Joint
Venture.
Arguing that the Act's exclusive remedy provision limited the
employees to their compensation benefits and precluded them from
bringing their common law damage claims, Becon Construction and
Bechtel Equipment moved for summary judgment on all of the
claims of the employees who sued them.
Analysis
The exclusive remedies provision of the workers compensation
Act states, "Recovery of workers' compensation benefits is the
exclusive remedy of an employee covered by workers' compensation
insurance coverage.…" The court held that, in Texas, a general
workplace insurance plan that binds a general contractor to
provide workers compensation insurance for its subcontractors
and its subcontractors' employees achieves the legislature's
objective with respect to work sites where multitiered
relationships exist. Interpreting the workers compensation Act
in a way that favors blanket coverage to all workers on a site
aligns more closely with the legislature's "decided bias" for
coverage.
With respect to the various contractual insurance provisions
at issue, the court ruled the contracts not ambiguous. It said
that, collectively, the contracts contained an unambiguous
expression that made it clear that Motiva, the Bechtel–Jacobs
Joint Venture, Becon Construction, Bechtel Equipment,
Performance, Empire Scaffold, and A&L Industrial intended to
create a general workplace insurance plan providing a single
workers compensation insurance policy covering all of their
respective employees.
The prime contract between the Bechtel–Jacobs Joint Venture
and Motiva required Bechtel–Jacobs to establish a contractor
controlled insurance program (CCIP), creating a general
workplace insurance plan for the project. Motiva's contract with
Performance required that Performance and its subcontractors
enroll in the general workplace insurance plan created by the
Bechtel–Jacobs Joint Venture. In this case, it was undisputed
that Empire Scaffold's and A&L Industrial's employees were
enrolled in the general workplace plan created for the project.
While the respective master service agreements required that
Empire Scaffold and A&L Industrial purchase workers compensation
coverage covering their work, the summary judgment evidence
conclusively established that Empire Scaffold and A&L Industrial
adjusted their contract prices for the Motiva project to account
for the fact that the insurance on Motiva's project was to be
provided through a general workplace insurance plan. By
adjusting the prices they charged for their work they were being
hired to perform, Empire Scaffold and A&L Industrial effectively
purchased the coverage for their work on Motiva's project under
the terms of the master service agreements they had with
Performance.
With respect to the work the employees were doing at the time
the crane collapsed, the court of appeal concluded that the
summary judgment evidence conclusively established that A&L
Industrial and Empire Scaffold were enrolled in the general
workplace insurance plan established on the Motiva project and
that the summary judgment evidence conclusively established that
the employees collected workers compensation benefits through
the general workplace insurance plan.
In a case that involved a work site arrangement similar but
not identical to this one, Etie v. Walsh
& Albert Co., Ltd., 135 S.W.3d 764 (Tex. App.—Houston 1st
Dist. 2004, pet. denied),
the court explained that, where general workplace insurance
plans exist, "the purposes of the Act are best served by deeming
immune from suit all subcontractors and lower tier
subcontractors who are collectively covered by workers'
compensation insurance." In Etie,
the court concluded that the deemed employment relationship
extends throughout all tiers of subcontractors. Similarly, the
San Antonio Court of Appeals has stated that, for sites governed
by general workplace insurance plans, all of the employees
covered by the compensation plan for the site are treated as
"'fellow employees'" for the purposes of the Act.
See Garza v. Zachry Constr. Corp.,
373 S.W.3d 715 (Tex. App.—San Antonio 2012,
pet. denied).
The court held that the various contracts effectively made
Becon Construction and Bechtel Equipment agents of the
Bechtel–Jacobs Joint Venture for purposes of compensation
coverage; consequently, both Becon Construction and Bechtel
Equipment were entitled to rely on the exclusive remedy defense
against the claims of the employees who sued them because they
were participating subcontractors on a site utilizing a general
workplace insurance plan authorized by the Act.
The court went on to say that, given the legislature's
decided bias in favor of employers electing to provide coverage
through a policy that encourages the provision of workers
compensation coverage to all workers on a given work site, the
Act should not be interpreted in the manner the employees
argued. The employees' interpretation would discourage
contractors from becoming involved in work sites governed by
general workplace insurance plans and might prevent some
employees who would otherwise be covered by insurance from being
covered under these types of policies due to the violation of
regulations, as it did not appear that the legislature intended
for these types of violations to strip employers of defenses or
to cause employees to lose the benefits of their coverage.
Regardless of what might or might not happen in the future,
the court said, evaluating whether a general workplace insurance
plan provides a defendant with an exclusive remedy defense
requires that courts look at what did happen, not what might
happen. In this case, conclusive summary judgment evidence shows
that the employees collected compensation benefits under
coverage put in place based on the general workplace insurance
plan established by the Bechtel–Jacobs Joint Venture for
Motiva's project.
Conclusion
The summary judgment evidence conclusively established that
the exclusive remedy defense of the workers compensation Act
applied to all of the claims made by the employees who sued. The
court held that the trial court erred by granting the employees'
no-evidence motion for summary judgment and by denying Becon
Construction's and Bechtel Equipment's joint motion for summary
judgment. Exercising its power, the appellate court reversed the
trial court and entered summary judgment in favor of the
employers and found that workers compensation is the exclusive
remedy available to the injured workers.
Employees strike a bargain with the state. When their
employer maintains workers compensation insurance, the employees
will receive benefits governed by the state's workers
compensation statutes in exchange for agreeing that the law is
the exclusive remedy available to the employee injured on the
work site without a need to prove liability, negligence, or any
other tort. In this case, it is also clear that, when many
contractors and subcontractors enter into a joint agreement to
all use the same insurance, all become, by reason of their
contracts, joint employers of each and every employee for the
purposes of workers compensation insurance.
© 2014 Barry Zalma, Esq., CFE