Port Elevator Brownsville v. Casados

Supreme Court of Texas.

PORT ELEVATOR–BROWNSVILLE, L.L.C., Petitioner,

v.

Rogelio CASADOS and Rafaela Casados, Individually and as Representatives of the Estate of their Son Rafael Casados, Respondents.

No. 10–0523.

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Argued Oct. 6, 2011.

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Decided Jan. 27, 2012.

Attorneys & Firms

*239 Adriana Hernandez Cardenas, Atlas & Hall, L.L.P., McAllen, for Port Elevator–Brownsville, LLC.

David E. Keltner, Kelly Hart & Hallman, Fort Worth, for Rogelio Casados.

Jay M. Wallace, Gibson McClure & Wallace, Dallas, for Amicus Curiae The American Staffing Association.

Opinion

Justice GUZMAN delivered the opinion of the Court.

Rafael Casados suffered a fatal, work-related injury while working for two employers that both had workers’ compensation coverage. Casados’s parents sued one of the employers. The principal issue in this case is whether workers’ compensation was the exclusive remedy to Casados’s parents, which would bar their suit against Port Elevator. The court of appeals held that the policy at issue did not cover Casados because he was a temporary worker and affirmed the judgment Casados’s parents obtained against Port Elevator. 314 S.W.3d 529, 540. We have long held that the Labor Code and the rule against split workforces require employers to elect workers’ compensation coverage for all employees—except for limited statutory and common-law exceptions that do not apply here. Because Port Elevator had a workers’ compensation policy, Casados was an employee, he suffered a work-related injury, and the jury failed to find Port Elevator grossly negligent, the Texas Workers’ Compensation Act (TWCA) provides that the exclusive remedy is against the employer’s insurer—not the employer. Accordingly, the claim at issue in this appeal is barred, we reverse the judgment of the court of appeals, and render judgment for Port Elevator.

*240 I.

Rafael Casados worked for Staff Force, Inc. (Staff Force), a temporary staffing agency. Staff Force provided Casados to perform general labor for Port Elevator–Brownsville, LLC (Port Elevator) at its grain storage facility in April 2005. Casados suffered a fatal, work-related injury his third day on the job. Staff Force and Port Elevator both carried workers’ compensation insurance. Staff Force’s carrier was Dallas Fire Insurance Company (Dallas Fire) and Port Elevator’s carrier was Texas Mutual Insurance Company (Texas Mutual). The TWCA requires workers’ compensation insurers to reimburse burial expenses for employees such as Casados who had no spouse, children, or dependents, and to pay a certain sum into the subsequent injury fund. 408.186.¹ Dallas Fire offered to reimburse Casados’s parents up to the statutory amount for burial expenses and also paid the required $56,238 into the subsequent injury fund. Port Elevator reported the injury to Texas Mutual, but Texas Mutual denied coverage—claiming that Casados was a Staff Force employee and not a Port Elevator employee. There is no evidence that Casados’s parents sought benefits from Texas Mutual or appealed Texas Mutual’s denial of coverage. Rather, Casados’s parents sued Port Elevator for negligence, negligence per se, and gross negligence.

Port Elevator’s workers’ compensation policy with Texas Mutual covered all of Port Elevator’s places of employment. The policy requires Texas Mutual to “pay promptly when due the benefits required ... by workers compensation law.” The policy also estimates the premiums due by classifying employees and assessing the risk for each classification. The policy has classification codes for “clerical office employees” and “grain elevator operation & local managers, drivers.” The policy has no exclusion for temporary workers such as Casados.

Port Elevator raised the affirmative defense that workers’ compensation was the plaintiffs’ exclusive remedy. Both sides moved for summary judgment on the exclusive-remedy defense. Port Elevator argued it was a workers’ compensation subscriber, Casados was covered, and workers’ compensation was the exclusive remedy. Casados’s parents argued the policy did not cover Casados because: (1) Port Elevator did not pay premiums for temporary employees; (2) Casados was not covered by any code classification; and (3) Texas Mutual denied coverage. The trial court granted the plaintiffs’ motion for summary judgment and denied Port Elevator’s—allowing a trial on the negligence and gross negligence claims.

The jury found Port Elevator negligent but not grossly negligent. After factoring in a settlement credit, the trial court entered judgment on the jury’s award on the negligence claim. The court awarded $515,167.09 to Casados’s estate for pain, mental anguish, and pre-judgment interest and $2,189,967.76 to Casados’s parents for mental anguish, loss of companionship and society, and pre-judgment interest. The court of appeals affirmed. 314 S.W.3d at 540.

Because we conclude that Port Elevator conclusively established it subscribed to workers’ compensation insurance, that Casados was an employee, and that he suffered a work-related injury, we reverse the court of appeals’ judgment and render judgment in favor of Port Elevator.

*241 II.

Unlike workers’ compensation laws in every other state, the TWCA allows private Texas employers to choose whether to subscribe to workers’ compensation insurance. Lawrence, 44 S.W.3d at 552.

The Legislature intended the TWCA to benefit both employees and employers. For employees, the TWCA allows them to recover workers’ compensation benefits for injuries in the course and scope of employment without proving fault by the employer and without regard to their negligence or that of their coworkers. Western Steel Co. v. Altenburg, 206 S.W.3d 121, 123–24 (Tex.2006).

Although the TWCA specifies an employer may subscribe to workers’ compensation insurance by generally obtaining or declining coverage,² importantly, the employer may not split its workforce by electing coverage for some employees but not coverage for all. Tex. Workers’ Comp. Ins. Fund v. DEL Indus., Inc., 35 S.W.3d 591, 596 (Tex.2000) (“It has long been the law in Texas that an employer may not split its workforce by providing workers’ compensation insurance to some workers *242 while leaving others without coverage.”).³

Statutes and the common law provide certain limited exceptions that allow an employer to split its workforce—but no exception applies here. First, an employer may operate more than one distinct kind of business and elect workers’ compensation insurance for only one of its businesses. TEX. LAB.CODE § 406.097. Port Elevator made two exclusions, but they were at the executive level. Third, an employer may lease staff from another company under the Staff Leasing Services Act (SLSA). Id. § 91.042. However, the SLSA does not apply to work that is “temporary or seasonal in nature.” Id. § 91.001(14). Absent one of these statutory or common-law exceptions, an employer may not split its workforce.

An employee may have more than one employer within the meaning of the TWCA, and each employer who subscribes to workers’ compensation insurance may raise the exclusive-remedy provision as a bar to claims about the injury. See Id. at 124.

Here, the parties agree that Casados was an employee of both Staff Force and Port Elevator and that Port Elevator was a workers’ compensation subscriber at the *243 time of the accident. The parties disagree as to whether Casados was covered by Port Elevator’s workers’ compensation policy. However, a client company is entitled to the exclusive remedy defense upon showing that it was the plaintiff’s employer and that it was covered by a workers’ compensation policy. DEL Indus., 35 S.W.3d at 596. There is no evidence that any exception to the rule against splitting workforces applies here: (1) Port Elevator operated only one business; (2) Casados was not an officer of Port Elevator; and (3) Casados was a temporary employee, not a leased employee. Because Port Elevator was Casados’s employer, it was a workers’ compensation subscriber, and Casados’s injury was work-related, Port Elevator conclusively proved its exclusive-remedy defense.

III.

Casados’s parents would have us adopt an additional, intent-based exception to the rule against splitting workforces. Specifically, Casados’s parents claim that Port Elevator intended to and did exclude Casados from coverage under its workers’ compensation policy because: (1) Port Elevator did not pay premiums for temporary workers like Casados; (2) Casados was a temporary employee whose job classification was not listed in Port Elevator’s policy; and (3) Texas Mutual denied coverage. We disagree that an employer can contract around the rule against split workforces or that the above three factors mean that Casados was not covered by Port Elevator’s policy.

The exception that Casados’s parents urge us to adopt would undermine the very purpose of our long-standing rule that an employer may not (intentionally or unintentionally) split its workforce. An employer may not choose to exclude certain employees from coverage unless a statutory or common-law exception to the rule against split workforces applies. A key purpose of the rule against split workforces is that employees know whether they have the protections of workers’ compensation coverage.⁴ Allowing employers to select which employees to cover would not only violate our long-standing rule against split workforces but would also be in tension with our decision to liberally construe the TWCA to find coverage for employees. Navarette, 706 S.W.2d at 309–10. We see no compelling reason to so significantly alter the rule against split workforces by adopting Casados’s parents’ position.

Casados’s parents’ three specific assertions are also unavailing. Their first assertion is that Casados was not covered because Port Elevator excluded him by failing to pay premiums for temporary workers. This assertion fails for two reasons. First, premiums are an issue between the employer and the insurer; they do not affect the employee’s coverage. *244 Coal Operators Cas. Co. v. Richardson, 414 S.W.2d 735, 738 (Tex.Civ.App.-Beaumont 1967, writ ref’d n.r.e.) (“This [workers’ compensation] protection to plaintiff was not lost because his employer failed to pay the proper premium to the insurance company.”). Second, even a clear and unambiguous attempt to exclude Casados from coverage would violate the rule against splitting workforces. See supra Part II.

Casados’s parents’ second assertion is that Casados was not covered by any job classification in Port Elevator’s workers’ compensation policy. As addressed in Part II, the rule against split workforces requires that all employees be covered—absent a limited statutory or common-law exception. Because no exception applies, it does not matter whether Casados was covered by a code classification.

Third, Casados’s parents assert that Texas Mutual’s denial of coverage means that Casados was not covered. Casados was covered by Staff Force’s policy with Dallas Fire as well as Port Elevator’s policy with Texas Mutual. Casados had the right to pursue workers’ compensation benefits from Dallas Fire, Texas Mutual, or both. See TEX. LAB.CODE § 408.001(a).

In conclusion, because Port Elevator subscribed to workers’ compensation insurance, Casados was an employee of Port Elevator, and he suffered a work-related injury, the TWCA-provided remedy against Texas Mutual was the exclusive remedy for his injury. Casados’s parents’ negligence claim against Port Elevator is barred. Accordingly, we reverse the judgment of the court of appeals and render judgment for Port Elevator.