The Texas Supreme Court ruled that a Texas Workers’ Compensation Act (TWCA) provision for what constitutes an employee does not affect the enforceability of an additional-insured provision under the Texas Anti-Indemnity Act (TAIA).
In a March 4 opinion delivered by Justice Brett Busby, the court responded to a certified question from the United States Court of Appeals for the Fifth Circuit on the scope of the employe exception to the TAIA. The TAIA generally blocks an indemnitor from indemnifying or insuring an indemnitee against a claim caused by the negligence of the indemnitee or its employees or agents.
The case before the court involved an employee of a general contractor, Skanska USA, Inc. The worker was injured in a crane accident and sued the subcontractor that operated the crane, Berkel and Co. Contractors, and the company that leased the crane, Maxim Crane Works, L.P.. Berkel had named Maxim as an additional insured under its commercial general liability insurance policy, making Berkel an indemnitor and Maxim an indemnitee.
The injured worker recovered workers’ compensation benefits under Skanska’s contractor-controlled insurance program and successfully sued Berkel and Maxim in state court. Berkel and Maxim settled, with 90% of the fault allocated to Berkel and 10% to Maxim. Maxim unsuccessfully sought reimbursement from Berkel’s insurer Zurich. Berkel appealed and the Fourteenth Court of Appeals reversed the trial court’s judgment against Berkel because it concluded the TWCA provided the exclusive remedy for the worker’s injuries.
In a separate suit, Maxim sought declaratory relief and damages against Zurich for denying Maxim coverage as an additional insured under Berkel’s policy.
The question in front of the Supreme Court then was whether the injured worker qualified as an employee of Berkel, the indemnitor, under the TAIA.
The Supreme Court answered in the negative.
Maxim’s argument hinged on the TWCA’s definition of an employer-employee relationship and whether it’s transferrable to the TAIA.
Under section 406.123 of the the TWCA, a general contractor is allowed to be deemed the statutory employer of the subcontractor and the subcontractor’s employees “[only] for purposes of the workers’ compensation laws.” Maxim argued that the court should construe “employee” in section 151.103 of the TAIA “to include any person or entity that the TWCA would treat as an employee of the indemnitor.”
The Supreme Court shot that argument down, saying the TWCA does not affect the ordinary meaning of “employee” in the TAIA exception.
Topics Texas
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