Court of Appeals Enforces OCIP Workers Comp Bar, Reverses $17 Million Verdict and Renders Take Nothing Judgment

Court of Appeals Enforces OCIP Workers Comp Bar, Reverses $17 Million Verdict and Renders Take Nothing Judgment

May 7, 2018

On May 3, 2018, the Houston First District Court of Appeals reversed a $17,720,000 verdict against Austin Bridge & Road, LP (“ABR”) and rendered a take nothing verdict based on the exclusive remedy defense (commonly referred to as the “comp bar”) under the Texas Workers Compensation Act. The case, Austin Bridge & Road, LP v. Suarez, et al., No 01-16-00682-CV, involved a jobsite death during the construction of McLane Stadium at Baylor University. ABR was a subcontractor on the McLane Stadium project for the general contractor, Austin Commercial. The deceased was working for an ABR subcontractor on a pedestrian bridge over the Brazos River, when his man-lift tipped, falling off a barge and into the Brazos River. The plaintiff drowned as a result of the accident.

ABR was not the plaintiff’s direct employer. However, as we detailed in a related postlast December, § 406.123 of the Texas Workers Compensation Act extends comp bar protection to all participating tiers of contractors and their employees when the general contractor “provides” workers compensation insurance through a project-specific “wrap”—either in the form of an Owner Controlled Insurance Program (“OCIP”) or Contractor Controlled Insurance Program (“CCIP”). In this instance, Baylor purchased an OCIP including workers compensation for the McLane Stadium project. Accordingly, Austin Bridge & Road moved for summary judgment on the basis of the exclusive remedy as extended by § 406.123. The trial court denied summary judgment and, in fact, awarded plaintiff a “no evidence” summary judgment on this issue.

ABR appealed, and Cokinos | Young submitted an amicus brief in support of ABR, urging the court to apply the exclusive remedy. The amicus brief was sponsored by Texas Building Branch of the Associated General Contractors of America (“TBB – AGC”); Associated Builders and Contractors (“ABC”) of Texas; TEXO – The Construction Association (“TEXO”); Associated General Contractors – Houston Chapter; and American Contractors Insurance Company Risk Retention Group (“ACIG”).

On appeal, the court relied on the Texas Supreme Court’s decision in HCBeck, Ltd. v. Rice, 284 S.W.3d 349, 350 (Tex. 2009), where the Texas Supreme Court held that a general contractor on a project with an OCIP (negotiated and purchased by the owner) nonetheless “provides” workers compensation insurance as required by Section 406.123 when its downstream contracts require all subcontractors on site to enroll in the OCIP, and coverage is in fact in place. The court found that, under the HCBeckanalysis, Austin Commercial “provided” workers compensation through its prime contract with Baylor, which incorporated the OCIP and required enrollment by all contractors and subcontractors on site.

In this instance, however, because ABR was a subcontractor, not the general contractor, the court’s analysis did not end with HCBeck. The court relied on its previous holding in Etie v. Walsh & Albert Co., 135 S.W.3d 764 (Tex. App.—Houston [1st Dist.] 2004, pet. denied) andthe Texas Supreme Court’s most recent OCIP exclusive remedy decision n TIC Energy & Chem. Inc. v. Martin, 498 S.W.3d 68 (Tex. 2016) to find that when the general contractor provides workers compensation in compliance with § 406.123, “the statutory employer/employee relationship extends throughout all tiers of subcontractors and that all covered employees are fellow servants who are equally entitled to workers compensation benefits and equally immune from suit.” Thus, ABR and the plaintiff were fellow servants engaged in a common endeavor and were each entitled to mutual protection from tort claims. Based on that finding, the court reversed the judgment on plaintiff’s negligence claims and entered a take nothing judgment in favor of ABR.

This case provides further clarification that when a wrap is in place, tort immunity extends through all tiers of participating contractors on site. As a practical takeaway, properly crafted OCIP contractual provisions, complying with the Texas Workers Compensation Act and relevant recent Texas Supreme Court case law, particularly HCBeck, can shield all tiers of enrolled contractors from injury claims by employees of other contractors and subcontractors.