<p>TEXAS WORKERS' COMPENSATION SUBROGATION AND EMPLOYER LIABILITY AT A GLANCE</p><p>Michael D. Carr & Joseph M. Nemo</p><p>1. Third-party situations. Every time a worker is injured at work, there are at least two parties, namely, the worker and the employer, for purposes of workers' compensation litigation. However, when the worker is injured through the fault or negligence of someone who is not an agent of his employer, issues of workers' compensation subrogation and employer liability arises as a result of claims that may be brought against the negligent third party. These situations typically arise in automobile accidents, construction accidents, product liability accidents, premises accidents, and medical malpractice claims (Houston Gen. Ins. Co. v. Campbell, 964 S.W.2d 691 (Tex.App.-Corpus Christi 1998)). In Texas an employer does not have to purchase workers’ compensation insurance or in essence can self-insure for all or some of their workers’ compensation obligations. See, V.T.C.A. Labor Code § 406.033 and Tex. Ins. Code Art. 5.55C.</p><p>2. Workers' compensation subrogation. In many respects Texas is very pro employer when it comes to workers’ compensation subrogation. The employer by statute has the right to have its workers’ compensation lien paid back first before the injured worker is paid whether the employer separately pursues reimbursement, intervenes in the injured worker’s suit, or just sits back and waits for the injured worker to prosecute the claim. See, V.T.C.A. Labor Code § 417.001; Rockwood Ins. Co. v. Williamson, 596 F. Supp. 1524 (N.D. Tex. 1984); Capitol Aggregates, Inc. v. Great Am. Ins. Co., 408 S.W.2d 922 (Tex. 1966). For this reason, the employer has the choice to settle their claim independently where the injured worker does not. See, Brandon v. Am. Sterilizer Co., 880 S.W.2d 488 (Tex.Civ.App.- Austin 1994). </p><p>3. Workers' compensation as an exclusive remedy. Under V.T.C.A. Labor Code § 406.123, an injured worker cannot sue his employer or a coworker for anything other than workers' compensation benefits unless there has been an intentional act even if there is willful gross negligence. See, Castleberry v. Goolsby Building Corp., 617 S.W.2d 665 (Tex. 1981); Reed Tool Co. v. Copelin, 689 S.W.2d 404 (Tex. 1985). A third party may also be able to avoid liability to a worker if acting in a "loaned servant” type situation where a worker is leased to the employer under V.T.C.A. Labor Code §§ 408.001, 410.033 and 91.042. </p><p>4. Employer lien reduction for proportionate fault under V.T.C.A. Labor Code § 417.001(b) and Tex. Civ. Prac. & Rem. Code § 33.002. In Texas, since July 1, 2003, the employer’s lien is reduced by the amount the court reduces the judgment based upon the responsibility for fault of the employer determined by the trier of fact under V.T.C.A. Labor Code § 417.001(b) and Tex. Civ. Prac. & Rem. Code §§ 33.002 and 33.003. However, an employer cannot be sued for contribution or indemnity by a third party unless the employer has contractually agreed to indemnify the third party or there has been a violation of the prohibition of working within six feet of a power line in the Texas Public Utilities Act. See, Petroleum Exploration & Operating Corp. v. J.W. McCutchen Drilling Co., 593 S.W.2d 831 (Tex.Civ.App.-Fort Worth 1980)(indemnity); Houston Lighting & Power Co. v. Eller Outdoor Advertising Co. of Texas, 635 S.W.2d 133 (Tex.App.-Houston [1st Dist.] 1982)(power line). </p><p>DISCLAIMER: This summary is intended as an educational resource and is not intended to provide definitive answers. Consultation with the applicable laws and/or competent counsel should always be obtained.</p><p>Copyright 2009 Michael D. Car, Joseph M. Nemo, and Arthur, Chapman, Kettering, Smetak & Pikala, P.A. 500 Young Quinlan Building, 81 South Ninth Street, Minneapolis, MN 55402-3214, (612) 339-3500 FAX (612) 339-7655 [email protected] – www.arthurchapman.com – [email protected] 5. Statutory distribution </p><p>Upon recovery from a third-party tortfeasor, either by way of trial or settlement, generally, if the employer is unrepresented, the injured workers’ attorney should be allowed to deduct reasonable attorneys fees not to exceed 1/3rd and proportionate costs from the lien pursuant to V.T.C.A. Labor Code § 417.003. However, if the employer is actively represented an apportionment hearing is held pursuant to V.T.C.A. Labor Code § 417.003 to divide the contingent fee between the employer’s attorney and the injured worker’s attorney based upon whose services benefitted the employer’s recovery. See generally, Caesar v. Bohacek, 176 S.W.3d 282 (Tex.Civ.App.-Houston[1st Dist] 2004); Autry v. Dearman, 933 S.W.2d 182 (Tex.App.-Houston[14th Dist.] 1996). After the employer is reimbursed for their workers’ compensation lien the remainder of the judgment or settlement is then given back to the worker and is available as a credit against future workers' compensation benefits. See, V.T.C.A. Labor Code § 417.001; Rockwood Ins. Co. v. Williamson, 596 F. Supp. 1524 (N.D. Tex. 1984) ; Capitol Aggregates, Inc. v. Great Am. Ins. Co., 408 S.W.2d 922 (Tex. 1966). </p><p>6. Uninsured and underinsured motor vehicle. The employer has the right to recover workers= compensation paid and payable from an underinsured or uninsured motor vehicle policy only if it is a policy paid for by the employer. Erivas v. State farm Mut. Auto. Ins. Co., 141 S.W.3d 671 (Tex. App.-El Paso 2004); City of Corpus Christi v. Gomez, 141 S.W.3d 767 (Tex.App.-Corpus Christi 2004). </p><p>7. Statutes of Limitations (Generally). If the employer files suit prior to the statute of limitations running, it tolls the injured workers’ claim as long as the injured worker intervenes before the suit is dismissed. See, Franks v. Sematech, 936 S.W.2d 959 (Tex. 1997). </p><p>TYPE OF CLAIM APPLICABLE LAW TIME PERIOD Personal injury Tex. Civ. Prac. & Rem. Code § 16.003 Two years Wrongful death Tex. Civ. Prac. & Rem. Code § 16.003 Two years Contract Tex. Civ. Prac. & Rem. Code § 16.006 Four years Medical malpractice Tex. Civ. Prac. & Rem. Code § 16.003 Two years from date tort or completion of Jones v. Miller, 964 S.W.2d 159 treatment or completion of hospitalization. (Tex.Civ.App.-Houston 1998) Product liability Tex. Civ. Prac. & Rem. Code § 16.003 Two years Tex. Civ. Prac. & Rem. Code § 16.012 Not more than 15 years after initial sale unless manufacturer or seller represent a longer useful life Improvements to Real Property Tex. Civ. Prac. & Rem. Code § 16.008 Ten year Statute of Repose from substantial completion</p><p>8. Helpful Internet Links:</p><p>NAME/SUBJECT WEB ADDRESS TO LINKS NOTE Texas Legislature, Statutes Labor Code, Chapter 406: Workers’ Compensation http://www.statutes.legis.state.tx.us/ Insurance Coverage</p><p>Texas Workers’ Compensation Act http://www.tdi.state.tx.us/wc/act/index.h Third Party Liability- Tex. Stat. 417.001-004 tml#pdf Texas Courts and Cases http://www.courts.state.tx.us </p><p>DISCLAIMER: This summary is intended as an educational resource and is not intended to provide definitive answers. Consultation with the applicable laws and/or competent counsel should always be obtained.</p><p>Copyright 2009 Michael D. Car, Joseph M. Nemo, and Arthur, Chapman, Kettering, Smetak & Pikala, P.A. 500 Young Quinlan Building, 81 South Ninth Street, Minneapolis, MN 55402-3214, (612) 339-3500 FAX (612) 339-7655 [email protected] – www.arthurchapman.com – [email protected] Texas Department of Insurance http://www.tdi.state.tx.us/consumer/wc. Texas Basic Manual of Rules on Texas Workers’ html Compensation and Workers’ Compensation Rate Guide Texas Workforce Commission http://www.twc.state.tx.us/customers/be Texas Labor and Unemployment Laws and Policies mp/bempsub5.html and OSHA Texas Legislature, Statutes Labor Code, Chapter 406: Workers’ Compensation http://www.statutes.legis.state.tx.us/ Insurance Coverage</p><p>DISCLAIMER: This summary is intended as an educational resource and is not intended to provide definitive answers. Consultation with the applicable laws and/or competent counsel should always be obtained.</p><p>Copyright 2009 Michael D. Car, Joseph M. Nemo, and Arthur, Chapman, Kettering, Smetak & Pikala, P.A. 500 Young Quinlan Building, 81 South Ninth Street, Minneapolis, MN 55402-3214, (612) 339-3500 FAX (612) 339-7655 [email protected] – www.arthurchapman.com – [email protected] DISCLAIMER: This summary is intended as an educational resource and is not intended to provide definitive answers. Consultation with the applicable laws and/or competent counsel should always be obtained.</p><p>Copyright 2009 Michael D. Car, Joseph M. Nemo, and Arthur, Chapman, Kettering, Smetak & Pikala, P.A. 500 Young Quinlan Building, 81 South Ninth Street, Minneapolis, MN 55402-3214, (612) 339-3500 FAX (612) 339-7655 [email protected] – www.arthurchapman.com – [email protected] DISCLAIMER: This summary is intended as an educational resource and is not intended to provide definitive answers. Consultation with the applicable laws and/or competent counsel should always be obtained.</p><p>Copyright 2009 Michael D. Car, Joseph M. Nemo, and Arthur, Chapman, Kettering, Smetak & Pikala, P.A. 500 Young Quinlan Building, 81 South Ninth Street, Minneapolis, MN 55402-3214, (612) 339-3500 FAX (612) 339-7655 [email protected] – www.arthurchapman.com – [email protected] </p>