Your FREE and easy resource for all things Texas workers' compensation

Supreme Court of Texas.

IN RE STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and Terecina Shahan, Relators

In re State Farm Mutual Automobile Insurance Company and Todd Joseph Dauper, Relators

No. 19-0791, No. 19-0792

|

Argued December 2, 2020

|

OPINION DELIVERED: March 19, 2021

ON PETITION FOR WRIT OF MANDAMUS

Attorneys & Firms

Beth D. Bradley, Dallas, Matthew P. Rigney, Lisa Ann Songy, for Amici Curiae American Property Casualty Insurance Association, Insurance Council of Texas.

Armando De Diego, Melissa A. Lorber, Austin, for Relators Shahan, Terecina, State Farm Mutual Automobile Insurance Company.

Carlos Cortez, Meghana Wadhwani, Matthew J. Kita, Dallas, for Real Party in Interest.

Opinion

Justice Blacklock delivered the opinion of the Court.

These original proceedings arise from suits by holders of underinsured motorist (“UIM”) insurance seeking recovery against their insurers following traffic accidents. Plaintiffs in such cases often bring claims for breach of their insurance policies as well as statutory, extracontractual claims authorized by the Insurance Code. The common practice has been to sever and abate the Insurance Code claims while an initial trial is conducted on the breach-of-contract claim to determine whether the underinsured motorist was liable for the accident and, if so, the amount of damages suffered by the insured. A plaintiff who succeeds in this first phase of the case may then proceed to litigate its Insurance Code claims in light of the result of the initial trial.

A wrinkle in the cases before us is that the insureds did not sue for breach of their insurance policies. Although they seek recovery of the amount they claim to be owed under their policies, they brought only extracontractual, Insurance Code claims. They contend that because they brought only statutory claims, and because there are no breach-of-contract claims to sever and try first, no bifurcation of trial is required. As explained below, we disagree.

Under USAA Texas Lloyds v. Menchaca, 545 S.W.3d 479 (Tex. 2018), a plaintiff seeking recovery of benefits owed under an insurance policy must first establish his entitlement to policy benefits as a contractual matter before he can recover them as damages for an Insurance Code claim. As a result, although the plaintiffs’ claims in these cases are not labeled breach of contract, they nevertheless must establish State Farm’s liability under their insurance policies as a prerequisite to recovery on their Insurance Code claims. Just as an initial “car crash” trial is typically required to determine the underinsured motorist’s liability and the amount of damages when the insured brings both breach-of-contract and Insurance Code claims, insureds who bring only Insurance Code claims seeking policy benefits as damages must also succeed in an initial “car crash” trial in order to lay the predicate for their statutory claims. We therefore conditionally grant the petitions for writ of mandamus and direct the trial courts to proceed in accordance with this opinion.

I.

BACKGROUND

Real Parties in Interest Al Dodds and Alexander Nicastro have UIM insurance with State Farm. The same counsel represents Nicastro and Dodds in this Court.

Nicastro was injured when Dominique Smith allegedly swerved into Manuel Reyes who, in turn, collided with Nicastro. Nicastro seeks to recover “past medical expenses and anticipated future medical expenses totaling up to $438,247.00.” According to State Farm, Nicastro provided documentation of $11,747 in incurred medical costs. Nicastro requested State Farm approve his acceptance of a $30,000 settlement with Smith’s insurer. State Farm obliged and told Nicastro he “has been fully indemnified” for his medical expenses. Nicastro then sought UIM benefits from State Farm. His UIM policy limit is $100,000, but State Farm refused to pay anything.

Dodds was injured when Jose Cojchamale allegedly ran a red light and struck his vehicle. The impact caused Dodds to strike another vehicle. Dodds seeks to recover past medical expenses of $45,668.92 and future medical expenses of $212,250.00, totaling $257,918.92. With State Farm’s approval, Dodds accepted a $30,000 settlement from Cojchamale’s insurer, the maximum amount of Cojchamale’s policy. Dodds then sought UIM benefits from State Farm, which paid Dodds an additional $18,190.41 without an explanation for the discrepancy between the amount paid and the amount requested. Dodds’ UIM policy limit is $50,000.

Nicastro and Dodds both sued State Farm and two State Farm adjusters, who they allege failed “to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim with respect to which the insurer’s liability has become reasonably clear,” TEX. INS. CODE § 541.060(a)(2)(A), and failed to “promptly provide to a policyholder a reasonable explanation of the basis in the policy, in relation to the facts or applicable law, for the insurer’s denial of a claim or offer of a compromise settlement of a claim,” id. § 541.060(a)(3). Neither Nicastro nor Dodds sued State Farm for breach of his UIM policy.

Dodds’ UIM policy covers amounts he is “legally entitled to recover” from an underinsured motorist when “the total limits of insurance and self-insurance for bodily injury liability from all sources are less than the amount needed to compensate the insured for bodily injury damages.” Nicastro’s policy covers amounts he is “legally entitled to recover” from an underinsured motorist whose limit of liability “is not enough to pay the full amount the covered person is legally entitled to recover as damages.” As damages for their Insurance Code claims, Nicastro and Dodds both seek the amounts State Farm allegedly should have paid them under their UIM policies.

In both cases, State Farm filed motions for bifurcated trial under Rule 174(b). State Farm argued that before its liability for Insurance Code claims can be determined, an initial trial is necessary to establish the liability and underinsured status of the other motorists. The matters to be determined in this initial trial, State Farm contends, are necessary predicates to the plaintiffs’ statutory claims. As State Farm sees it, the plaintiffs must obtain a judicial determination that the third parties are liable for their injuries and are underinsured motorists before the plaintiffs can recover on their Insurance Code claims. Nicastro and Dodds opposed State Farm’s motions, arguing that (1) they may recover UIM benefits as extracontractual damages without first establishing that they are “legally entitled to recover” from the underinsured motorists if they do not allege a breach-of-contract claim, and (2) this Court’s decision in USAA Texas Lloyds v. Menchaca, 545 S.W.3d 479 (Tex. 2018), overruled Brainard v. Trinity Universal Insurance Co., 216 S.W.3d 809 (Tex. 2006), and changed well-established principles governing UIM claims.

The trial courts denied State Farm’s motions. State Farm petitioned for mandamus relief in the Fifth Court of Appeals, arguing the trial courts abused their discretion in denying State Farm’s motions to bifurcate. The court of appeals denied the petitions without substantive explanation. State Farm filed mandamus petitions in this Court.

II.

STANDARD OF REVIEW

Mandamus is an extraordinary remedy that will issue “only to correct a clear abuse of discretion or the violation of a duty imposed by law when there is no other adequate remedy by law.” Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992) (orig. proceeding) (quoting Johnson v. Fourth Court of Appeals, 700 S.W.2d 916, 917 (Tex. 1985) (orig. proceeding)). Generally, mandamus relief is unavailable “to correct incidental trial court rulings when there is a remedy by appeal.” In re Entergy Corp., 142 S.W.3d 316, 320 (Tex. 2004) (orig. proceeding) (per curiam). A trial court abuses its discretion when its “ruling is arbitrary and unreasonable, made without regard for guiding legal principles or supporting evidence.” In re Nationwide Ins. Co. of Am., 494 S.W.3d 708, 712 (Tex. 2016) (orig. proceeding). We determine the adequacy of an appellate remedy “by balancing the benefits of mandamus review against its detriments.” In re Team Rocket, L.P., 256 S.W.3d 257, 262 (Tex. 2008) (orig. proceeding).

III.

THE INSURANCE CODE CLAIMS

Nicastro and Dodds sued State Farm for violations of sections 541.060(a)(2)(A) and (a)(3) of the Insurance Code. An insurer violates section 541.060(a)(2)(A) if it “fail[s] to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim with respect to which the insurer’s liability has become reasonably clear.” An insurer violates section 541.060(a)(3) if it “fail[s] to promptly provide to a policyholder a reasonable explanation of the basis in the policy, in relation to the facts or applicable law, for the insurer’s denial of a claim or offer of a compromise settlement.” As an initial matter, the parties disagree about what the plaintiffs must show to recover on their Insurance Code claims. We must resolve that disagreement before assessing whether State Farm is entitled to the bifurcated trials it seeks.

State Farm contends a UIM insurer has no obligation to pay policy benefits as damages for Insurance Code claims unless the insured first establishes the insurer’s liability under the UIM policy. To establish that liability, State Farm argues, the insured must obtain a judicial determination that the other motorist is liable for the crash and has insurance coverage insufficient to cover the insured’s damages. Nicastro and Dodds disagree. They contend State Farm is liable to them if it violates the Insurance Code, irrespective of whether they can prove entitlement to policy benefits. They argue that to succeed on their Insurance Code claims they must only show that (1) State Farm failed to offer them fair settlements when its liability became “reasonably clear,” or (2) State Farm failed to provide reasonable explanations for its denials of the claims or offers of compromise settlements. TEX. INS. CODE §§ 541.060(a)(2)(A), (a)(3).

In Menchaca,1 this Court recognized two paths an insured may take to establish the damages caused by an insurer’s violation of the Insurance Code: either the insured establishes (1) “a right to receive benefits under the policy” or (2) “an injury independent of a right to benefits.” 545 S.W.3d at 500. Under the first path, if an insured “establishes a right to receive benefits under the insurance policy [he] can recover those benefits as ‘actual damages’ under the [Insurance Code] if the insurer’s statutory violation causes the loss of benefits.” Id. at 495. And under the second path, “if an insurer’s statutory violation causes an injury independent of the insured’s right to recover policy benefits, the insured may recover damages for that injury even if the policy does not entitle the insured to receive benefits.” Id. at 499. As Menchaca made clear, there is no alternative to these two pathways. “An insured cannot recover any damages based on an insurer’s statutory violation if the insured had no right to receive benefits under the policy and sustained no injury independent of a right to benefits.” Id. at 489.

The plaintiffs contend this two-pronged framework is limited to homeowners’ insurance claims like the one in Menchaca, but that is not the case. The dual pathway outlined in Menchaca emerges from a line of cases that includes UIM cases and does not distinguish between varieties of insurance policies. See, e.g., Provident Am. Ins. Co. v. Castañeda, 988 S.W.2d 189, 198 (Tex. 1998) (addressing damages recoverable if an insurer fails to adequately investigate a health insurance policy claim); Republic Ins. Co. v. Stoker, 903 S.W.2d 338, 341 (Tex. 1995) (recognizing the possibility an insurer may cause injury independent of UIM policy claim when denying the claim); Aranda v. Ins. Co. of N. Am., 748 S.W.2d 210, 213 (Tex. 1988) (developing test to assess whether insurer’s denial of insurance claims was in “good faith” in workers’ compensation context), overruled by Tex. Mut. Ins. Co. v. Ruttiger, 381 S.W.3d 430 (Tex. 2012).

A.

INDEPENDENT INJURY

Relying on Menchaca’s second path, Nicastro and Dodds allege State Farm caused them independent injuries by violating the Insurance Code. We continue to recognize “the possibility that in denying [a] claim, the insurer may commit some act, so extreme, that would cause injury independent of the policy claim.” Stoker, 903 S.W.2d at 341. To establish “injury independent of the policy claim,” however, Nicastro and Dodds must show their “damages are truly independent of [their] right to receive policy benefits.” Menchaca, 545 S.W.3d at 500. In other words, to recover under an independent-injury theory, the insureds must establish that State Farm’s statutory violations caused an injury apart from State Farm’s failure to pay as much as the insureds believe they should have been paid under their UIM policies.

Here, however, the only injury Nicastro and Dodds assert is State Farm’s failure to adequately pay them under their UIM policies. They seek, as damages for their Insurance Code claims, the amount they believe State Farm should have offered or paid under the policies. This is precisely the theory of recovery Menchaca foreclosed in the absence of a right to policy benefits: “When an insured seeks to recover damages that are predicated on, flow from, or stem from policy benefits, the general rule applies and precludes recovery unless the policy entitles the insured to those benefits.” Id.

Nicastro and Dodds emphasize that their claims under the Insurance Code are not premised on the denial of benefits. Instead, they are premised on the failure to offer a reasonable settlement and the failure to explain the denial of benefits. True, the claims are premised on State Farm’s violations of the Insurance Code, not its violations of the UIM policies. But as explained in Menchaca and prior cases, when it comes to damages, the question is not whether the insured’s claims are independent of the right to receive policy benefits. The question is whether the alleged “damages are truly independent of the insured’s right to receive policy benefits.” Id. at 499–500 (emphasis added); see also Castañeda, 988 S.W.2d at 198 (“[N]one of the actions or inactions of Provident American was the producing cause of any damage separate and apart from those that would have resulted from a wrongful denial of the claim.”).2

Again, the only damages claimed by Nicastro and Dodds are predicated on State Farm’s obligation to pay them under their UIM policies. Said otherwise, the insureds’ theory of damages is that if State Farm had followed the Insurance Code, it would have paid more in UIM benefits than it did. These are not “damages [that] are truly independent of the [ ] right to receive policy benefits.” Id. To the contrary, the insureds’ entitlement to these damages is entirely predicated on their entitlement to policy benefits. They assert no injuries independent of the denial or underpayment of benefits. Their statutory claims are merely a means to recoup damages in the amount of a reasonable settlement offer under the policies; they are not “truly independent” of Nicastro’s and Dodds’ rights to receive policy benefits. See id. at 499–500. As a result, the insureds cannot recover for State Farm’s alleged Insurance Code violations under an “independent-injury” theory.3

B.

RIGHT TO RECEIVE BENEFITS UNDER THE POLICY

Because the insureds do not allege “damages [that] are truly independent of the insured’s right to receive policy benefits,” they must establish their rights to policy benefits in order to recover on their Insurance Code claims. Id. Establishing a right to UIM policy benefits, however, is not always a straightforward enterprise. As this Court previously observed, a “UIM contract is unique because, according to its terms, benefits are conditioned upon the insured’s legal entitlement to receive damages from a third party.” Brainard, 216 S.W.3d at 818.

This “unique” aspect of UIM claims arises from both the Insurance Code and the terms of UIM policies. The Insurance Code requires that UIM coverage must:

provide for payment to the insured of all sums which he shall be legally entitled to recover as damages from owners or operators of underinsured motor vehicles because of bodily injury or property damage in an amount up to the limit specified in the policy, reduced by the amount recovered or recoverable from the insurer of the underinsured motor vehicle.

TEX. INS. CODE § 1952.106 (emphasis added). The policies at issue here employ similar “legally entitled to recover” language. Under both the Insurance Code and these policies, State Farm “is obligated to pay damages which the insured is ‘legally entitled to recover’ from the underinsured motorist.” Brainard, 216 S.W.3d at 818. In Brainard, we interpreted this language to mean that an “insurer’s contractual obligation to pay benefits does not arise until liability and damages are determined.” Id. Thus, in order to establish State Farm’s liability to them under their UIM policies—as they must to recover on their Insurance Code claims—Nicastro and Dodds must first obtain determinations of the third-party drivers’ liability and the amount of damages.

With this legal background in mind, we must decide whether State Farm is entitled to bifurcated trials, which would consist of (1) initial “car crash” trials to determine the underinsured motorists’ liabilities and therefore State Farm’s liability under the UIM policies and, if the insureds succeed at the initial trials, (2) trials of the Insurance Code claims to determine whether State Farm violated its statutory obligations. State Farm urges us to follow the practice of the courts of appeals, which routinely require bifurcation of trial in cases, like these two, where the insurer’s liability for statutory claims is predicated on its liability for breach of the UIM policy. See, e.g., In re Colonial Cnty. Mut. Ins. Co., No. 01-19-00391-CV, 2019 WL 5699735, at *5 (Tex. App.—Houston [1st Dist.] Nov. 5, 2019, orig. proceeding) (per curiam) (mem. op.) (ordering the trial court to abate the severed statutory extracontractual claims until resolution of breach of contract suit).4

We agree with the many court of appeals decisions holding that “extra-contractual claims must be [bifurcated] until the underinsured motorist breach of contract claim is determined.” In re Allstate Fire & Cas. Ins. Co., No. 12-17-00266-CV, 2017 WL 5167350, at *4 (Tex. App.—Tyler Nov. 8, 2017, orig. proceeding) (mem. op.). In the unique context of UIM litigation, this common bifurcation process makes sense for at least two reasons.

First, bifurcation tends to preserve judicial resources. The plaintiffs’ Insurance Code claims cannot be resolved without first determining whether State Farm has a contractual duty to pay UIM benefits. “The rationale for requiring [bifurcation] of these types of [statutory] claims is that they may be rendered moot by a determination of underlying [non-]liability.” Id. The insureds’ statutory claims need not be considered at all if State Farm has no duty to pay under their policies. Like any other litigant, “[i]nsurers have a substantial right not to undergo the expense of litigating and conducting discovery on issues that ultimately may be unnecessary because of the result of the underlying tort case.” In re Colonial Cnty. Mut. Ins. Co., 2019 WL 5699735, at *5; see also In re Germania Ins. Co., 2018 WL 1904911, at *4 (“If the causes were not severed, Germania would be required to put forth the effort and expense of conducting discovery, preparing for trial, and conducting voir dire on bad faith and other extra-contractual claims that could be rendered moot by the portion of the trial relating to breach of contract for uninsured motorist benefits.”).

Second, bifurcation of trial is proper because evidence of the insurer’s settlement offer may be admissible in one phase of the trial but inadmissible in the other. When determining whether an insurer has breached its UIM policy by failing to pay, courts frequently exclude evidence of a settlement offer because the offer “creates prejudice” by suggesting the insurer has already admitted some liability. In re State Farm Mut. Auto. Ins. Co., 395 S.W.3d at 234; TEX. R. EVID. 408.5 On the other hand, in the trial of bad-faith claims, the settlement offer is generally admissible as evidence of the insurer’s good-faith (or bad-faith) efforts to resolve the claim. See Liberty Nat’l Fire Ins. Co. v. Akin, 927 S.W.2d 627, 630 (Tex. 1996).6 “Absent [bifurcation], an insurer is presented with a ‘Catch-22’ in that its decision to admit or exclude evidence of a settlement offer jeopardizes the successful defense of the other [issue].” In re State Farm Mut. Auto. Ins. Co., 395 S.W.3d at 234. “[I]n this situation, the trial court can only reach one decision which adequately protects the parties’ rights and that is to order [bifurcation] of the [issues].” In re Am. Nat’l Mut. Ins. Co., 384 S.W.3d at 435.

We agree with the consensus view of the courts of appeals on this point. Requiring State Farm to litigate its liability for UIM policy benefits alongside its liability for extracontractual claims would unduly prejudice the insurer and amounts to an abuse of discretion by the trial court. See id. at 434 (“[A] majority of intermediate courts of appeals have concluded that it is an abuse of discretion for a trial court to refuse to grant a severance of contractual claims from extra-contractual claims when an offer of settlement has been made by the insurer.”).

Of course, all the court of appeals cases cited above arise from cases involving both breach-of-contract claims and Insurance Code claims. Nicastro and Dodds argue that their cases should be treated differently because they brought only Insurance Code claims. As a result, they contend, there is no breach-of-contract claim to “sever” and no claim to “abate.” Even so, the logic of the commonly applied sever-and-abate rule applies with equal force here, although the procedural machinations may be slightly different. While Nicastro and Dodds pleaded their cases unlike past UIM plaintiffs, the showings they must make in order to recover are the same showings required of other UIM plaintiffs who pleaded both breach-of-contract and statutory claims and were required to try those claims separately.

Texas Rule of Civil Procedure 174(b) authorized the trial courts to bifurcate the trials of the insureds’ Insurance Code claims, as requested by State Farm. The rule states: “The court in furtherance of convenience or to avoid prejudice may order a separate trial of any claim, cross-claim, counterclaim, or third-party claim, or of any separate issue or of any number of claims, cross-claims, counterclaims, third-party claims, or issues.” TEX. R. CIV. P. 174(b) (emphasis added). Thus, the trial courts could have ordered separate trials on the predicate issues of the insureds’ entitlements to benefits under their UIM policies. Nicastro and Dodds need not “add causes of action to [the] ongoing litigation,” as they contend, for the logic of the severance-and-abatement rule to apply to bifurcation in their cases. Nor must they “file lawsuit[s] they do not want to bring.” State Farm’s motions sought bifurcation of the trials of the Insurance Code claims, pursuant to Rule 174(b), which would not require the plaintiffs to amend their pleadings or bring unwanted claims.

“When all of the facts and circumstances of the case unquestionably require a separate trial to prevent manifest injustice, and there is no fact or circumstance supporting or tending to support a contrary conclusion, and the legal rights of the parties will not be prejudiced thereby, there is no room for the exercise of discretion.” Womack v. Berry, 156 Tex. 44, 291 S.W.2d 677, 683 (1956). Because the Insurance Code claims at issue here require Nicastro and Dodds to make the very same showings as the many other plaintiffs whose UIM claims are routinely subject to bifurcated trials, the trial courts abused their discretion by denying State Farm’s motions to bifurcate trial under Rule 174(b).

IV.

ADEQUATE APPELLATE REMEDY

State Farm argues it lacks an adequate appellate remedy due to the time and money it would waste waiting on the eventual reversal of improperly conducted proceedings. Nicastro and Dodds respond that State Farm has an adequate remedy by appeal: “It can pursue discovery, attempt to prove that it did not violate the Insurance Code, and seek summary judgment, a declaratory judgment, prevail at trial, and if it fails at any of these options, it can always challenge the sufficiency of the evidence (or any other adverse ruling) in a traditional appeal.” Real Party in Interest’s Response at 2–3. We agree with State Farm.

When a bifurcated trial is denied in these circumstances, the insurer lacks an adequate appellate remedy for the “time and money utterly wasted enduring eventual reversal of improperly conducted proceedings.” In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 136 (Tex. 2004) (orig. proceeding). We agree with the many courts of appeals that have found mandamus relief to be the only adequate remedy in similar cases.7

V.

CONCLUSION

We conditionally grant State Farm’s petitions for writ of mandamus and direct the trial courts to bifurcate the trials of the Insurance Code claims as described herein. We are confident the trial courts will comply, and the writs will issue only if they do not.

Footnotes

1

Understanding Menchaca’s precedential status requires careful examination of the different sections of the Court’s opinion and the alignment of votes for each. With only eight Justices sitting, some parts of the opinion—sections III.B through III.G—garnered only a plurality of four or fewer votes. These portions of the opinion do not represent the view of a majority of the Court at the time and are therefore not binding precedent of the Court. See Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 626 (Tex. 1996) (“Plurality opinions are not binding precedent of this Court.”); Univ. of Tex. Med. Branch at Galveston v. York, 871 S.W.2d 175, 177 (Tex. 1994) (“Because the principles of law involved have not been agreed upon by a majority of the sitting court, the plurality opinion is not authority for determination of other cases, either in this Court or lower courts.”). A majority of the Court, however, joined sections I, II, and III.A of Menchaca. These portions of Menchaca represent the opinion of a majority of the Court at the time, and they carry the full weight of the precedent of this Court. The citations to Menchaca contained in today’s opinion all come from portions of Menchaca that unquestionably represent the precedent of this Court.

Section II of Menchaca—which garnered seven votes—articulates five interlocking legal principles applicable to insurance litigation, several of which have application in today’s cases. See 545 S.W.3d at 486–503. Those principles are: (1) “an insured cannot recover policy benefits for an insurer’s statutory violation if the insured does not have a right to receive benefits under the policy”; (2) “an insured who establishes a right to receive benefits under an insurance policy can recover those benefits as ‘actual damages’ under the statute if the insurer’s statutory violation causes the loss of the benefits”; (3) “an insured can recover benefits as actual damages under the Insurance Code even if the insured has no right to those benefits under the policy, if the insurer’s conduct caused the insured to lose that contractual right”; (4) “an insurer’s extra-contractual liability is ‘distinct’ from its liability for benefits under the insurance policy”; and (5) “[a]n insured cannot recover any damages based on an insurer’s statutory violation unless the insured establishes a right to receive benefits under the policy or an injury independent of a right to receive benefits.” Id. at 490–502 (cleaned up).

2

Quoting Menchaca, Nicastro and Dodds argue “an insured need not prevail on a separate breach-of-contract claim to recover policy benefits for a statutory violation.” 545 S.W.3d at 504. They neglect, however, to cite another passage from Menchaca that clarifies this holding: “While an insured cannot recover policy benefits for a statutory violation unless the jury finds that the insured had a right to benefits under the policy, the insured does not also have to prevail on a separate breach-of-contract claim based on the insurer’s failure to pay those benefits.” Id. at 494. Under Menchaca, Nicastro and Dodds cannot simply allege statutory claims under the Insurance Code and thereby bypass the requirement that they establish their rights to receive benefits under their policies.

3

Nicastro and Dodds correctly observe that State Farm’s obligations under the Insurance Code are triggered as soon as its liability becomes “reasonably clear.” See TEX. INS. CODE § 541.060(a)(2)(A). From this premise, they reason that they need not show State Farm’s ultimate liability under the policies in order to establish that at some point its liability had become “reasonably clear.” State Farm responds that its liability to pay a UIM claim does not become “reasonably clear” until “the insured obtains a judgment establishing the liability and underinsured status of the other motorist.” Brainard, 216 S.W.3d at 818. We need not resolve that dispute, however. Regardless of when the insurer’s statutory duty to attempt a good-faith settlement arises, Menchaca establishes that the insured does not suffer legally cognizable damages owing to the insurer’s breach of that duty unless (1) he was actually owed benefits under the policy or (2) the refusal to settle causes him damages independent of his entitlement to policy benefits. 545 S.W.3d at 500.

4

See also In re Germania Ins. Co., No. 13-18-00102-CV, 2018 WL 1904911, at *5 (Tex. App.—Corpus Christi–Edinburg Apr. 23, 2018, orig. proceeding) (mem. op.) (severing and abating extracontractual claims pending resolution of contract claims); In re State Farm. Mut. Auto Ins. Co., 395 S.W.3d 229, 240–41 (Tex. App.—El Paso 2012, orig. proceeding) (ordering trial court to sever and abate extracontractual claims pending determination of contract claim); In re Am. Nat’l Cnty. Mut. Ins. Co., 384 S.W.3d 429, 439 (Tex. App.—Austin 2012, orig. proceeding) (same); In re State Farm Mut. Auto. Ins. Co., 553 S.W.3d 557, 565 (Tex. App.—San Antonio 2018, orig. proceeding) (finding the “trial court erred by not granting the abatement” of extracontractual claims).

5

See also Akin, 927 S.W.2d at 630 (“[T]he insurer would be unfairly prejudiced by having to defend the contract claim at the same time and before the same jury that would consider evidence that the insurer had offered to settle the entire dispute.”); In re Progressive Cas. Ins. Co., No. 12-20-00220-CV, 2020 WL 6065933, at *3 (Tex. App.—Tyler Oct. 14, 2020, orig. proceeding) (mem. op.); In re Old Am. Cnty. Mut. Fire Ins. Co., No. 13-11-00412-CV, 2012 WL 506570, at *5 (Tex. App.—Corpus Christi–Edinburg Feb. 16, 2012, orig. proceeding); In re Travelers Lloyds of Tex. Ins. Co., 273 S.W.3d 368, 374 (Tex. App.—San Antonio 2008, orig. proceeding); In re Allstate Ins. Co., No. 06-05-00051-CV, 2005 WL 1114640, at *2 (Tex. App.—Texarkana May 12, 2005, orig. proceeding) (mem. op.).

6

See also In re Miller, 202 S.W.3d 922, 926 (Tex. App.—Tyler 2006, orig. proceeding); In re Trinity Universal Ins. Co., 64 S.W.3d 463, 468 (Tex. App.—Amarillo 2011, orig. proceeding); Tex. Farmers Ins. Co. v. Stem, 927 S.W.2d 76, 80 (Tex. App.—Waco 1996, orig. proceeding); State Farm Mut. Auto. Ins. Co. v. Wilborn, 835 S.W.2d 260, 262 (Tex. App.—Houston [14th Dist.] 1992, no writ).

7

See, e.g., In re Germania Ins. Co., 2018 WL 1904911, at *2; In re Farmers Tex. Cnty. Mut. Ins. Co., 509 S.W.3d 463, 468 (Tex. App.—Austin 2015, orig. proceeding); In re Allstate Cnty. Mut. Ins. Co., 447 S.W.3d 497, 504 (Tex. App.—Houston [14th Dist.] 2014, orig. proceeding); In re United Fire Lloyds, 327 S.W.3d 250, 256 (Tex. App.—San Antonio 2010, orig. proceeding).

Supreme Court of Texas.

PATIENTS MEDICAL CENTER, Petitioner,

v.

FACILITY INSURANCE CORPORATION, Respondent

No. 19-0533

|

OPINION DELIVERED: January 29, 2021

ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE THIRD DISTRICT OF TEXAS

Attorneys & Firms

Steven M. Tipton, Austin, for Respondent.

Kelly M. Walla, Donald P. Wilcox, Austin, Laura Thetford, for Amicus Curiae Texas Medical Association.

Craig J. Pritzlaff, Dallas, Darren Lee McCarty, Adrienne R. Butcher, Jeffrey C. Mateer, Austin, Gen. W. Kenneth Paxton Jr., Judd E. Stone II, Ryan Lee Bangert, for Amicus Curiae Texas Department of Insurance, Division of Workers’ Compensation.

Andrea Schwab, Austin, for Amicus Curiae Texas Orthopaedic Association.

Thomas Daniel Hollaway, for Petitioner.

Opinion

Justice Lehrmann delivered the opinion of the Court.

This administrative appeal arises out of a medical fee dispute between a health care provider and a worker’s compensation insurance carrier over the proper amount of reimbursement for services rendered to a covered patient. The provider initiated a dispute resolution proceeding with the Texas Department of Insurance, Division of Workers’ Compensation (the Division), which determined that the provider was entitled to more than the carrier deemed due and ordered the carrier to pay the additional amount. Dissatisfied with the Division’s decision, the carrier requested a contested case hearing before the State Office of Administrative Hearings (SOAH), which reached the same conclusion as the Division. The issue presented here is whether the Administrative Law Judge (ALJ) who heard the case at SOAH erred in placing the burden of proof on the carrier at that hearing. The court of appeals agreed with the carrier that the burden belonged with the provider and remanded the case to SOAH for further proceedings. We disagree and hold that the ALJ properly applied the Division’s rules in allocating the burden of proof. Accordingly, we reverse the court of appeals’ judgment.

I. Overview of Medical Fee Dispute Resolution

The Texas Worker’s Compensation Act entitles an employee who sustains a compensable injury to all health care reasonably required by the nature of the injury as and when needed. TEX. LAB. CODE § 408.021(a). The Act tasks insurance carriers with making “appropriate payment of charges for medical services provided under [the Act]” and contains numerous requirements governing carriers’ payment of claims submitted by health care providers. Id. §§ 413.015(a); see also id. § 408.027. As relevant here, a health care provider who is “denied payment or paid a reduced amount for [a] medical service rendered” is entitled to a review of the service by the Division. Id. § 413.031(a)(1). The Division’s “role” in that context is to “resolv[e] disputes over the amount of payment due for services determined to be medically necessary and appropriate for treatment of a compensable injury” and to “adjudicate the payment given the relevant statutory provisions and commissioner rules.” Id. § 413.031(c).

The Division’s administrative rules outline the medical fee dispute resolution (MFDR) prerequisites and procedures. The process is triggered when a request for MFDR is filed with the Division. 28 TEX. ADMIN. CODE § 133.307(c).1 Both the requestor and the respondent then submit a plethora of information and documents to the Division. Id. § 133.307(c)(2), (d)(2). The Division “review[s] the completed request and response to determine appropriate MFDR action” and issues a decision. Id. § 133.307(f).

If the dispute “remains unresolved” after the above-described review, a party may request a nonadversarial benefit review conference. TEX. LAB. CODE §§ 413.031(k), .0312(a)–(b); see also id. § 410.024. Barring a party’s timely request for such a conference, however, the Division’s MFDR decision is final. 28 TEX. ADMIN. CODE § 133.307(g). If the benefit review conference is unsuccessful, the party is entitled to a contested case hearing before SOAH, to be conducted pursuant to the Administrative Procedure Act. TEX. LAB. CODE § 413.0312(d), (e); see also 28 TEX. ADMIN. CODE § 133.307(g)(1) (requiring a party seeking review of an MFDR decision to request a benefit review conference), (g)(2) (following an unsuccessful benefit review conference, a party may “appeal the MFDR decision by requesting a contested case hearing”).2 Finally, a “party who has exhausted all administrative remedies” and “is aggrieved by a final decision of [SOAH] may seek judicial review of the decision.” TEX. LAB. CODE § 413.031(k-1). The Division is not considered to be a party to the dispute for purposes of the contested case hearing and the judicial-review proceeding. Id. § 413.031(k-2).

II. Factual and Procedural Background

In 2009, Patients Medical Center requested preauthorization from Facility Insurance Corporation, a worker’s compensation insurance carrier, to perform surgery on a covered patient. Facility issued a preauthorization letter, and the surgery was performed on September 23, 2009. On September 30, Patients sent Facility a bill for its services in the amount of $94,640.48, identifying the corresponding billing codes. Facility determined that most of the billed charges exceeded the scope of the preauthorization. With respect to the remaining “allowable” charges, Facility determined that it was responsible for only 92% of those charges pursuant to an informal network contract (between Patients and another insurer) from which Facility was entitled to benefit. Based on those conclusions, Facility paid Patients a total of $2,354.75. Facility denied Patients’ request for reconsideration. See 28 TEX. ADMIN. CODE § 133.250(a) (allowing a health care provider “dissatisfied with the insurance carrier’s final action on a medical bill” to request that the carrier reconsider its action).

On April 19, 2010, Patients sent Facility a “corrected bill” adjusting the billing codes. Facility denied any additional reimbursement on the ground that the second bill constituted an untimely claim for payment. See TEX. LAB. CODE § 408.027(a) (requiring claims for payment to be submitted to the carrier “not later than the 95th day after the date on which the health care services are provided to the injured employee”).

On September 23, 2010, Patients submitted a request for MFDR to the Division. After reviewing the parties’ written submissions and documentation, the dispute resolution officer issued the Division’s “Findings and Decision.” The officer found that the services rendered were not subject to a contractual fee arrangement3 and ultimately concluded that the total reimbursable amount for the preauthorized services under applicable Division rules and fee guidelines was $22,850.53, resulting in an additional reimbursement of $20,495.78 due to Patients. The Division notified the parties of their right to “appeal this decision by requesting a contested case hearing” at SOAH. Facility did so,4 and each party was instructed to submit to SOAH a copy of all documents it had submitted to the dispute resolution officer along with “any other documents the party might offer into evidence.”

After a hearing, the ALJ issued its decision, resolving three issues that Facility had raised in arguing its initial reimbursement amount was correct. First, Facility argued that Patients’ original timely claim for payment, which was the subject of the MFDR proceeding, did not qualify as a “complete medical bill”5 under the Division’s rules and that Patients thus could not seek additional reimbursement from the Division. See 28 TEX. ADMIN. CODE § 133.240(a) (requiring a carrier to take timely final action “after conducting bill review on a complete medical bill”). The ALJ disagreed, concluding that the initial bill “was a complete medical bill that contained an incorrect procedure code” and that the Division thus “had authority to consider [Patients’] request for additional reimbursement.” Second, the ALJ concluded that Facility, the party that had requested the contested case hearing, bore the burden of proof at that hearing. Third, the ALJ held that the medical procedures Patients performed were within the scope of Facility’s preauthorization. The ALJ accordingly concluded that Facility “failed to carry its burden of proving that Patients Medical Center was not entitled to $20,495.78 in additional reimbursement” and ordered payment of that amount, plus interest.

Having exhausted its administrative remedies, Facility filed a petition for judicial review of SOAH’s decision. The trial court affirmed, holding that the ALJ’s order was supported by substantial evidence. See TEX. GOV’T CODE § 2001.174 (providing for substantial-evidence review of a decision in a contested case if the law authorizing judicial review of the decision “does not define the scope” thereof). Facility appealed, raising five issues. The court of appeals addressed only one,6 holding that the ALJ erred in placing the burden of proof on Facility at the SOAH hearing and that this “legal and procedural error prejudiced [Facility’s] substantial rights.” 574 S.W.3d 436, 443–44 (Tex. App.—Austin 2018). The court thus reversed the trial court’s judgment and remanded the case to the Division for further proceedings. Id. at 444; see TEX. GOV’T CODE § 2001.174(2)(C), (D) (requiring reversal of an agency order if a party’s substantial rights have been prejudiced because the agency’s findings are made through unlawful procedure or are affected by other error of law). We granted Patients’ petition for review.7

III. Discussion

Like the court of appeals, we reach only one issue: whether the ALJ erred in placing the burden of proof on Facility at the contested case hearing. Unlike the court of appeals, we hold that the ALJ’s determination regarding the burden of proof was correct.

The pertinent SOAH rule provides that “[i]n determining which party bears the burden of proof, the [ALJ] shall first consider the applicable statute, the referring agency’s rules, and the referring agency’s policy in accordance with § 155.419 of this chapter.” 1 TEX. ADMIN. CODE § 155.427.8 The “applicable statute” governing review of medical fee disputes is silent on who bears the burden of proof in a contested case hearing following the Division’s initial MFDR decision. See TEX. LAB. CODE §§ 413.031(k), .0312(e). We thus turn to the Division’s administrative rules, which place the burden of proof in such a hearing on “the party seeking relief.” 28 TEX. ADMIN. CODE § 148.14(b). The parties disagree about the proper application of that rule under the circumstances presented, in which the provider initiated the administrative process by requesting MFDR but the carrier, dissatisfied with the Division’s decision, continued the process by requesting a contested case hearing.9

The ALJ concluded that “the party seeking affirmative relief from the agency decision” has the burden of proof in an MFDR contested case hearing at SOAH. Accordingly, the ALJ held that Facility, the party that requested the hearing to challenge the Division’s MFDR decision, bore the burden of proof at that hearing. The court of appeals disagreed and held that the party “seeking relief” at SOAH is the provider irrespective of which party has challenged the Division’s initial decision, concluding: “The SOAH hearing comprises, essentially, yet another step in the statutorily prescribed process initiated by a provider via its filing of an administrative dispute with the Division on its claim for reimbursement after being denied payment by a carrier.” 574 S.W.3d at 442–43 (emphasis in original). We agree with the ALJ.

We interpret administrative rules using the same principles we apply when construing statutes. TGS-NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432, 438 (Tex. 2011). That is, we strive to give effect to the promulgating agency’s intent, “which is generally reflected in the [rules’] plain language.” Zanchi v. Lane, 408 S.W.3d 373, 376 (Tex. 2013). Further, administrative rules, like statutes, should be analyzed “as a cohesive, contextual whole.” Sommers for Ala. & Dunlavy, Ltd. v. Sandcastle Homes, Inc., 521 S.W.3d 749, 754 (Tex. 2017).

The court of appeals took a static view of the parties’ positions during the administrative phase of the proceeding to hold that the provider, as the party who initiates the MFDR process to determine the proper reimbursement amount, is “the party seeking relief” throughout that process until SOAH reaches a final decision. 574 S.W.3d at 443. But the Division’s rules, considered as a contextual whole, do not support that view. Instead, the rules characterize the party requesting a contested case hearing as the party “seek[ing] review” of and “appeal[ing]” the MFDR decision. 28 TEX. ADMIN. CODE § 133.307(g)(1)–(2). Thus, the identity of “the party seeking relief” depends not on who initially requested MFDR but on who requested relief at SOAH.

This conclusion is consistent with our precedent, in which we have described the process for resolving medical fee disputes as follows:

[C]arriers do not make the final determination of the fees for disputed claims. If a carrier and a provider disagree on the reimbursement amount, TWCC [the Division’s predecessor agency], not the carrier, makes the decision on the proper payment, subject to review. Any party that is not satisfied with the outcome may continue the review process through SOAH and then the courts.

Tex. Workers’ Comp. Comm’n v. Patient Advocates of Tex., 136 S.W.3d 643, 656–57 (Tex. 2004) (internal citations omitted). Applying that reasoning here, the Division, not Facility, made the decision on the proper reimbursement amount in this medical fee dispute. Patients was satisfied with that outcome, but Facility was not and sought review of the decision by requesting a contested case hearing. Accordingly, Facility was “the party seeking relief.” 28 TEX. ADMIN. CODE § 148.14(b).10

The court of appeals faulted the ALJ for assigning the burden of proof in a manner that required Facility to “prove a negative”: that Patients “[was] not entitled to $20,495.78 in additional reimbursement.” 574 S.W.3d at 443. According to the court, this “rendered the legislature’s grant of a contested-case hearing to [Facility] useless” because the “ALJ may simply uphold the decision of the [dispute resolution officer] on the basis of the [officer’s] decision itself.” Id. at 444.

In our view, the court of appeals arrived at that conclusion by disregarding the analysis the ALJ conducted in order to reach his ultimate finding regarding the proper reimbursement amount. As noted, aside from the burden-of-proof issue, the ALJ addressed two other substantive issues that Facility raised: whether Patients submitted a timely, complete medical bill to Facility for payment and whether the procedures Patients performed exceeded the scope of preauthorization.11 In evaluating those issues, the ALJ considered all evidence presented at the contested case hearing, not just the documents that had been submitted to the Division. Further, the ALJ’s analysis reflects no deference to the dispute resolution officer’s findings or reliance on their accuracy. That is, there is no indication that the ALJ inferred from the existence of the Division’s findings that those findings were correct.12 Rather, based on his review of the evidence and resolution of Facility’s own issues against it, the ALJ ultimately concluded that Facility had failed to meet its burden of showing that Patients was not entitled to the additional reimbursement amount ordered by the Division. We fail to see how placement of the burden of proof on the party seeking review of the Division’s decision rendered that review meaningless.

Finally, Facility references a series of statutes and cases that purportedly support placing the burden of proof on the provider in medical fee disputes at SOAH. The cited authorities, however, speak to the parameters of judicial review of a final agency decision. See, e.g., TEX. GOV’T CODE § 2001.173 (describing the standard by which a trial court reviews a decision in a contested case hearing when the manner of review authorized is by trial de novo); TEX. LAB. CODE §§ 410.301(a), .303 (placing the burden of proof on “[t]he party appealing the decision” in a suit for judicial review of a final agency determination regarding income or death benefits in the worker’s compensation context).13 They are thus irrelevant to the issue at hand, which relates to the procedures and burdens governing an administrative contested case hearing, not the procedures and burdens governing judicial review of the decision resulting from that hearing.

IV. Conclusion

We hold that in a worker’s compensation medical fee dispute resolution proceeding, the burden of proof in a contested case hearing before SOAH is on the party seeking review of the Division’s initial MFDR decision. Accordingly, the court of appeals erred in holding that the burden always and necessarily remains on the provider. The parties invite us to consider other briefed issues that the court of appeals did not reach, but we decline to do so. We reverse the court of appeals’ judgment and remand the case to that court to consider Facility’s unaddressed issues.

Footnotes

1

With limited exceptions not relevant here, a request for MFDR must be filed no later than one year after the date of service. 28 TEX. ADMIN. CODE § 133.307(c)(1)(A).

2

Under the prior version of the Act and corresponding rules applicable to this case, a benefit review conference was not a prerequisite to a contested case hearing. Act of May 29, 2005, 79th Leg., R.S., ch. 265, § 3.245, 2005 Tex. Gen. Laws 469, 553, amended by Act of May 29, 2011, 82d Leg., R.S., ch. 1162, § 18, 2011 Tex. Gen. Laws 3010, 3015; see also TEX. ADMIN. CODE § 133.307(f) (2008) (authorizing a party to “seek review of the [MFDR] decision” by requesting a contested case hearing), amended by 37 Tex. Reg. 3833, 3834 (2012). The added step of participation in a benefit review conference is immaterial to our analysis of the issue presented.

3

The officer concluded that Facility failed to comply with certain notice requirements that would have entitled it to pay the claim at a contracted fee. See 28 TEX. ADMIN. CODE § 133.4(c), (g).

4

As noted, the Labor Code did not require a benefit review conference as a step in the dispute resolution process at that time. Accordingly, the parties did not participate in such a conference.

5

A “complete medical bill” is a “medical bill that contains all required fields as set forth in the billing instructions for the appropriate form specified in [the corresponding Division rule].” Id. § 133.2(4).

6

The court of appeals did not address: (1) whether the ALJ erred in failing to apply a contractual fee rate; (2) whether Patients failed to submit a timely, complete medical bill; (3) whether Patients waived its entitlement to MFDR by failing to request reconsideration of Facility’s denial of the “corrected bill”; and (4) whether the ALJ incorrectly determined Patients’ entitlement to and the amount of reimbursement. 574 S.W.3d 436, 441 (Tex. App.—Austin 2018).

7

Amicus briefs in support of the petition were submitted by the Division, Texas Orthopaedic Association, and Texas Medical Association.

8

The rule goes on to list additional factors that the ALJ “may [also] consider,” including:

(1) the status of the parties;

(2) the parties’ relative access to and control over information pertinent to the merits of the case;

(3) the party seeking affirmative relief;

(4) the party seeking to change the status quo; and

(5) whether a party would be required to prove a negative.

1 TEX. ADMIN. CODE § 155.427.

9

The standard of proof in a contested case is preponderance of the evidence. 28 TEX. ADMIN. CODE § 148.14(e).

10

We note that the preamble to Rule 148.14, published in the Texas Register when the rule was adopted, similarly describes the “party seeking relief” as the party who “seeks to change the result of an initial medical dispute decision.” 30 Tex. Reg. 3237, 3241 (2005). The Division’s statement regarding its own interpretation of the rule is thus consistent with the language it chose. See Rodriguez v. Serv. Lloyds Ins. Co., 997 S.W.2d 248, 254–55 (Tex. 1999) (explaining that the Texas Register is “[o]ur best source of the [agency’s] intent” but that an agency may not decline to “follow the clear, unambiguous language of its own regulation”).

11

Facility argues, and the court of appeals noted, that Facility raised other issues the ALJ did not specifically address, including whether the Division’s dispute resolution officer miscalculated the reimbursement amount under applicable fee guidelines. 574 S.W.3d at 441 n.5. The Division contrastingly asserts in its amicus brief that Facility did not challenge the Division’s application of its fee guidelines. That is a matter for the court of appeals to address on remand if necessary.

12

Facility complains of its inability to cross-examine the dispute resolution officer who issued the initial decision. But the officer was not a “witness,” and the decision was not “evidence”; it was a “decision on the proper payment, subject to review.” Patient Advocates of Tex., 136 S.W.3d at 656.

13

See also, e.g., In re Lazy W Dist. No. 1, 493 S.W.3d 538, 543 (Tex. 2016) (noting that when condemnation proceedings progress from the administrative phase to the judicial phase, the administrative proceedings “are ignored” and the case is tried like any other); Key W. Life Ins. Co. v. State Bd. of Ins., 350 S.W.2d 839, 846 (Tex. 1961) (holding that, on judicial review of an agency’s decision, the trial court is “without authority to substitute a nonstatutory standard for that prescribed by the statute”).

Supreme Court of Texas.

TEXAS BOARD OF CHIROPRACTIC EXAMINERS; PATRICK FORTNER, IN HIS OFFICIAL CAPACITY AS THE BOARD’S EXECUTIVE DIRECTOR; AND TEXAS CHIROPRACTIC ASSOCIATION, PETITIONERS,

v.

TEXAS MEDICAL ASSOCIATION, RESPONDENT

NO. 18-1223

|

Argued September 16, 2020

|

Opinion delivered: January 29, 2021

ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE THIRD DISTRICT OF TEXAS

Opinion

Nathan L. Hecht Chief Justice

This ten-year-old case is part of “a long history of professional, scientific, or economic antagonism between chiropractors and the medical community, and resultant disputes, spanning all three branches of government, regarding where any legal line between chiropractic and the practice of medicine is or should be.”1 The Texas Chiropractic Act (the Act)2 draws that line by defining the practice of chiropractic to include evaluating the musculoskeletal system and improv-ing the subluxation complex.3 The Texas Board of Chiropractic Examiners (the Board) has issued rules defining both terms as involving nerves in addition to muscles and bones.4 Another Board rule authorizes chiropractors to perform an eye-movement test for neurological problems that is known by the acronym VONT.5 The Texas Medical Association (TMA) asserts that only physi-cians may perform VONT. But as we recently stated, “every act that a physician may do is not automatically the unlawful practice of medicine when done by a non-physician, and terminology in one field may overlap with that of another.”6 We conclude that the challenged rules, read in context, do not exceed the statutory scope of chiropractic practice. We reverse that part of the court of appeals’ judgment declaring the rules invalid7 and render judgment that they are valid.

I

A

Chiropractic traces its roots to an encounter in the late 1800s between an alternative-medicine practitioner, D.D. Palmer, and his hearing-impaired office janitor. The details of the encounter have been disputed, but Palmer later claimed that he performed a manual manipulation of the janitor’s spine, after which his hearing rapidly improved.8 What is not in dispute is that Palmer came to theorize that disease and ill health are caused by vertebral misalignment, a condition he called subluxation.9

Like medical practice, chiropractic practice has evolved over the last century, though spinal alignment remains at its core. Today chiropractors are portal-of-entry healthcare providers in all 50 states, meaning that a referral is not required to visit one. Medicare and Medicaid cover chiro-practic services. Texas’ workers’ compensation regulations authorize the more than 6,000 chiro-practors in this state to treat injured workers.10

B

Article XVI, Section 31 of the Texas Constitution authorizes the Legislature to “pass laws prescribing the qualifications of practitioners of medicine in this State, and to punish persons for mal-practice”. Exercising that authority, the Legislature has passed the Medical Practice Act (the MPA).11 Practicing medicine is broadly defined as “the diagnosis, treatment, or offer to treat a mental or physical disease or disorder or a physical deformity or injury by any system or method”.12 The MPA empowers the Texas Medical Board “to regulate the practice of medicine” in Texas13 and provides that “[a] person may not practice medicine in this state unless the person holds a license issued” by the Board.14 The MPA carves out certain nonphysician healthcare providers whose practices would otherwise fall within the definition of practicing medicine, including dentists, optometrists, nurses, podiatrists, psychologists, physical therapists,15 and “licensed chiropractor[s] engaged strictly in the practice of chiropractic as defined by law”.16

The Act defines chiropractic practice. As passed in 1949, the Act provided that a chiro-practic practitioner is one “who shall employ objective or subjective means ... for the purpose of ascertaining the alignment of the vertebrae of the human spine[ ] and ... adjusting the vertebrae to correct any subluxation or misalignment thereof.”17 Forty years later, the Legislature amended this provision to define a chiropractic practitioner as one who “(1) uses objective or subjective means to analyze, examine, or evaluate the biomechanical condition of the spine and musculoskeletal system of the human body [or] (2) uses adjustment, manipulation, or other procedures in order to improve subluxation or the biomechanics of the musculoskeletal system”.18 We refer to these two provisions as evaluation and treatment, respectively. In 1995, the Legislature further clarified the evaluation provision.19 Today, following further amendments, the scope of chiropractic practice, now codified in § 201.002(b) of the Act, is as follows:

(b) A person practices chiropractic ... if the person:

(1) uses objective or subjective means to diagnose, analyze, examine, or evaluate the biomechanical condition of the spine and musculo-skeletal system of the human body; [or]

(2) performs nonsurgical, nonincisive procedures, including adjustment and manipulation, to improve the subluxation complex or the bio-mechanics of the musculoskeletal system[.]20

The Act does not define the terms in these provisions. It excludes “incisive or surgical procedures” from the practice,21 but that exclusion does not apply to “the use of a needle for the purpose of drawing blood for diagnostic testing.”22 The Act also excludes from chiropractic practice prescribing drugs and using x-rays or other therapies that expose the body to radiation.23 But the Act otherwise leaves to the Board the adoption of “rules clarifying what activities are included within the scope of the practice of chiropractic and what activities are outside of that scope.”24

The Board had no such rulemaking authority under the 1949 Act; its function was to license and train chiropractors.25 In 1981, the Legislature directed the Board to “adopt guidelines for ... acceptable practices for all aspects of the practice of chiropractic.”26 But the Legislature drew back in 1993, forbidding the Board from

adopt[ing] a rule relating to the meaning of the practice of chiropractic under this Act except for:

(1) a rule relating to an adjustment, manipulation, or other procedure directly related to improving the subluxation of the spine or of the musculoskeletal system as it directly relates to improving the subluxation of the spine; or

(2) a rule that defines an unacceptable practice of chiropractic and provides for a penalty or sanction under this Act.27

In the very next session, the Legislature about-faced, replacing this very restrictive provision with a 12-word carte blanche: “The Board shall adopt rules for regulation and enforcement of this Act.”28 Finally, in 2005 the Legislature amended the Act to clarify that “[t]he board may adopt rules ... necessary to ... regulate the practice of chiropractic” and “shall adopt rules for the en-forcement” of the Act.29 More specifically, the Act states:

The board shall adopt rules clarifying what activities are included within the scope of the practice of chiropractic and what activities are outside of that scope. The rules:

(1) must clearly specify the procedures that chiropractors may perform;

(2) must clearly specify any equipment and the use of that equipment that is prohibited; and

(3) may require a license holder to obtain additional training or certification to perform certain procedures or use certain equipment.30

Thus, over time the Legislature has chosen to prescribe chiropractic practice in broad terms undefined by statute and to require the Board to clarify by rules what activities are included and excluded. The Board consists of nine members, six chiropractors and three public members, all appointed by the Governor with Senate approval.31 The chiropractor appointees must be “reputa-ble” and currently “practicing”.32 Eligibility disqualifiers in the Act help protect against conflicts of interest.33 As a state administrative agency, the Board is required to comply with the notice-and-comment procedures of the Administrative Procedure Act (the APA) when promulgating rules.34 But the Act also imposes on the Board the additional obligation—“early in the rule development process” and “before [it] complies with the rulemaking requirements of” the APA—to “identify[ ] [the] persons who will be most affected” by the proposed rules and to solicit their “advice and opinions”.35 The APA, supplemented by the Act’s requirements, assures that the Board’s rulemaking process is informed by input from interested parties and the public and provides the protection of judicial review.

C

In 2006, the Board adopted what is now Rule 78.1, titled “Scope of Practice”, defining two critical terms in the Act’s definition of chiropractic practice.36 With respect to the evaluation pro-vision (§ 201.002(b)(1)), Rule 78.1(a)(5) defines musculoskeletal system as “[t]he system of mus-cles and tendons and ligaments and bones and joints and associated tissues and nerves that move the body and maintain its form.”37 With respect to the treatment provision (§ 201.002(b)(2)), Rule 78.1(a)(9) defines subluxation complex as

[a] neuromusculoskeletal condition that involves an aberrant relationship between two adjacent articular structures that may have functional or pathological sequelae, causing an alteration in the biomechanical and/or neuro-physiological reflections of these articular structures, their proximal structures, and/or other body systems that may be directly or indirectly affected by them.38

In comments to the Board, TMA opposed the definition of musculoskeletal system as “so broad as to include the nervous system and brain, and requested that the definition be limited to the spine.”39 The Board rejected the request, noting that its definition was based on medical dictionaries and was limited to structures “that move the body and maintain its form.”40 TMA also criticized the definition of subluxation complex as “expansive” and again requested that it be “re-vised to narrowly focus on the spine.”41 The Board also rejected this request, stating that its definition was consistent with the statute. “[A]s commonly used by health care providers,” the Board explained, “and as commonly described in medical dictionaries, the musculoskeletal system includes more than the spine.”42

The Board also adopted in the 2006 scope-of-practice rule a provision, now in Rule 78.1(d), stating that “[i]n the practice of chiropractic, licensees may render an analysis, diagnosis, or other opinion regarding the findings of examinations and evaluations.”43 At that time, the Act’s evalua-tion provision used only the words “analyze, examine, or evaluate” and did not include the word diagnose. Shortly after the rule was adopted, TMA sued for a declaration that diagnosis is the practice of medicine and beyond the Act’s authorization of chiropractors to “analyze, examine, or evaluate” certain conditions. The court of appeals rejected TMA’s contention, concluding that the diagnosis authorized by the rule was confined to the statutory practice of chiropractic.44

While that litigation was pending, the Board in 2010 adopted what is now Rule 78.1(c)(3)(B), authorizing chiropractors who complete specialized training and pass an examination to perform vestibular-ocular-nystagmus testing, or VONT.45 VONT is generally an eye-movement test performed with cameras or electrodes to detect nystagmus, a type of involuntary, side-to-side eye movement that may indicate a problem in the brain, inner ears, or eyes. Authorized chiropractors use the test to help diagnose the cause of a patient’s balance problem by ruling out a neurological condition that would require referral of the patient to a physician.

A few months later, TMA sued to invalidate the VONT rule as exceeding the scope of chiropractic practice prescribed by the Act. After the court of appeals reversed summary judgment for TMA,46 TMA amended its pleadings on remand to challenge Rule 78.1(a)’s definitions of the musculoskeletal system and the subluxation complex, asserting that their references to “nerves”, “neuromusculoskeletal condition”, and “neuro-physiological reflections” exceed the Act’s re-striction of chiropractic practice to “biomechanical condition[s]”.47 TMA added that the definitions authorized diagnosis, which it continued to insist, as it had in its earlier suit, is solely a medical practice.48 After a bench trial, the court issued findings of fact and conclusions of law, holding that the challenged rules are invalid because they exceed the statutory scope of chiropractic practice. It rendered judgment accordingly. The Board appealed, along with the Texas Chiropractic Association (TCA), which had joined the suit.

The court of appeals affirmed in part. Relying on the trial court’s findings of fact and the evidence adduced at trial, the court of appeals held that Rule 78.1(a)(5) and (9), defining muscu-loskeletal system and subluxation complex as involving the nervous system, exceed the scope of practice prescribed by § 201.002(b)(1)–(2) of the Act. The court concluded:

Although consideration of other bodily systems may be necessary to evaluate the biomechanical condition of the spine and the musculoskeletal system, that does not mean that the definition of “musculoskeletal system” should be expanded to include associated nerves or that “subluxation complex” should be defined as a condition extending beyond the musculoskeletal system. Based on our review of the evidence put forth before the trial court, we hold that sufficient evidence supports the court’s findings related to the Rule’s reference to nerves and the “neuromusculoskeletal system” in its definition of “musculoskeletal system” or “subluxation complex.”

The court reached the same conclusion regarding Rule 78.1(c)(3)(B), allowing certain chiroprac-tors to use VONT testing:

Although [the Board] produced evidence indicating that VONT may be a useful tool to chiropractors, the evidence establishes that VONT helps in the diagnosis of vestibular issues. The evidence further establishes that, although vestibular diseases might have an impact on the musculoskeletal system, disorders falling within the ambit of chiropractic do not cause vestibular pathologies. Simply because the test might under some circumstances be useful does not require that chiropractors be able to perform the test—the fact remains that the scope of chiropractic practice is limited under Texas law. On this record, we cannot conclude that the trial court erred in its findings of fact or in concluding that the Rule’s provision related to VONT exceeded the scope of chiropractic.49

While the appeal was pending, the Legislature amended the evaluation provision of the Act to add the word diagnose, so that the Act now authorizes chiropractors to “diagnose, analyze, examine, or evaluate the biomechanical condition of the spine and musculoskeletal system”.50 The court of appeals reversed the trial court’s judgment invalidating the rules as authorizing diagnosis outside the statutory scope of chiropractic practice.51

We granted the Board’s and TCA’s petitions for review. As their positions are aligned, we refer to their arguments simply as the Board’s.

II

As a threshold matter, the Board argues that the APA affords TMA no basis for challenging Rule 78.1. Section 2001.038(a) allows a challenge to an administrative rule “if it is alleged that the rule or its threatened application interferes with or impairs, or threatens to interfere with or impair, a legal right or privilege of the plaintiff.”52 The Board argues that TMA’s assertions do not meet this standard because there is no evidence that chiropractors are practicing medical neurology or failing to refer patients with medical problems to physicians. TMA, the Board contends, has done no more than assert policy differences with the Legislature over the scope of chiropractic practice. TMA responds that it has alleged that Rule 78.1 diminishes the privilege of practicing medicine and the value of physicians’ medical licenses by authorizing the unlicensed practice of medicine.

We agree with TMA that its allegation satisfies § 2001.038(a). The MPA recognizes that “the practice of medicine is a privilege” reserved to physicians subject to “licensing, regulating, and disciplining” under that statute.53 Obtaining and maintaining the privilege of practicing medi-cine imposes economic costs on physicians, and allowing nonphysicians to practice medicine out-side the MPA’s control would impair—or at least threaten to impair—that privilege.

The Board characterizes § 2001.038(a) as a “statutory standing” provision. Constitutional standing is a prerequisite for subject matter jurisdiction.54 In Finance Commission of Texas v. Nor-wood, we treated § 2001.038(a) “as but another expression of the general[,] [constitutional] doc-trine of standing.”55 But last Term in Pike v. EMC Management, LLC, we discouraged the use of the term standing to describe extra-constitutional restrictions on the right of a particular plaintiff to bring a particular lawsuit.56 “[T]he question whether a plaintiff has ... satisfied the requisites of a particular statute”, we said, “pertains in reality to the right of the plaintiff to relief rather than to the subject-matter jurisdiction of the court to afford it.”57

Although the Board does not argue that TMA lacks constitutional standing, “we have an obligation to examine our jurisdiction any time it is in doubt”.58 Constitutional standing requires a concrete injury that is both traceable to the defendant’s conduct and redressable by court order.59 When constitutional standing is raised for the first time on appeal, the test must be lenient because “there is no opportunity [for the plaintiff] to cure [a pleading] defect.”60 Construing the record “liberally ... as [we] must” at this stage61 and “resolving any doubt in [TMA’s] favor”,62 we conclude that TMA has constitutional standing to bring this lawsuit. Keeping in mind that no party contests TMA’s constitutional standing, we conclude that TMA’s assertion that some physicians will suffer economic harm due to increased competition from chiropractors sufficiently alleges the concrete injury required for standing.63 That alleged injury is directly traceable to the Board’s rule-making and would be redressed here by judicial invalidation of the challenged rules. Likewise, no party contests TMA’s associational standing to file suit on behalf of its members, and we conclude that TMA’s unchallenged allegations satisfy the requirements under our caselaw for associational standing.64

Having concluded that TMA is entitled to bring this action, we will now consider the merits of its claims.

III

The issue before us is whether Rules 78.1(a)(5) and (9), which define musculoskeletal system and subluxation complex, and Rule 78.1(c)(3)(B), which allows certain chiropractors to perform VONT, exceed the scope of practice prescribed by § 201.002(b)(1)–(2) of the Act. We first set out our standard of review, then consider its application to Board rulemaking, and finally determine the validity of the challenged rules.

A

Our standard of review in this case is well settled. The parties agree, as they must, that interpreting the Act and the rules involves only questions of law, which we determine de novo.65 Although the court of appeals never expressly agreed or disagreed with this standard, it repeatedly stated that its holdings were based on the evidence and the trial court’s findings. While it was not improper for the trial court to allow evidence to be offered as background describing medical and chiropractic practice and placing the case in context, the question whether the Board exceeded its authority by adopting rules that conflict with the Act is a legal one.

The parties also agree, again as they must, that agency rules are presumed valid and that the challenger has the burden of showing that a “rule’s provisions are not ‘in harmony with the general objectives of the act involved.’ ”66 The court of appeals acknowledged this principle in setting out the standard of review67 but never in its analysis, which gave no deference to the Board’s expertise regarding chiropractic practice.

When statutes use terms they do not define, as the Act does, “we must apply their common, ordinary meaning unless a contrary meaning is apparent from the statute’s language.”68 Of course, the Act’s terms must be understood in the context of healthcare in general and chiropractic practice in particular, which are the subject of the Act.69 The issue is whether the definitions that the Board adopted in the rules are consistent with the meaning of the terms in the Act.

We recently applied these principles in another case involving a challenge by TMA to the validity of an administrative rule. In Texas State Board of Examiners of Marriage and Family Therapists v. Texas Medical Association, TMA objected to an agency rule authorizing marriage and family therapists to provide diagnostic assessments using the Diagnostic and Statistical Manual of Mental Disorders, commonly referred to as the DSM.70 TMA argued there, as it also has in this case, that diagnosis is the practice of medicine and that the rule violated both the Licensed Marriage and Family Therapists Act and the MPA by empowering therapists to diagnose any mental disease or disorder. The Therapists Board countered that the rule only authorized therapists to diagnose disorders within their sphere of expertise and training.

We treated the question of the rule’s validity as a purely legal one and explained that we were obliged to decide it “based on the relevant Texas statutes” and “not on whether [therapists] are qualified to make DSM diagnoses or whether other states’ laws allow them to.”71 We began our analysis with the general principle that state administrative agencies like the Therapists Board have “only those powers that the Texas Legislature has expressly conferred upon [them] and those implied powers that are reasonably necessary to carry out [their] statutory duties.”72 Agency rules must therefore be “authorized by and consistent with [their] statutory authority.”73 “Courts generally presume”, we said, “that agency rules are valid, so parties who challenge a rule have the burden of proving its invalidity.”74 The challenger’s ultimate burden is to demonstrate “that the rule’s provisions are not ‘in harmony with the general objectives of the act involved’ ”, which we discern from the statute’s plain text.75 The challenger can meet his burden by showing that the challenged rule: “(1) contravenes specific statutory language; (2) runs counter to the general objectives of the statute; or (3) imposes additional burdens, conditions, or restrictions in excess of or inconsistent with the relevant statutory provisions.”76 Where the plaintiff argues that an agency rule is too per-missive, only the first two showings are relevant.

In Marriage and Family Therapists, we explained that when the governing statute does “not define ... key terms, we ... apply their common, ordinary meaning unless a contrary meaning is apparent from the statute’s language.”77 We cited for this proposition University of Texas at Arlington v. Williams, where we had reiterated that “context is fundamental to understanding the use of language” and cautioned against drawing “meaning ... from isolated words or phrases”.78 If a definition that is “different, more limited, or [more] precise” than the dictionary definition “is apparent from the term’s use in the context of the statute, [then] we apply that meaning.”79

The starting point of our analysis in Marriage and Family Therapists was the language of the Licensed Marriage and Family Therapists Act authorizing therapists to engage in “the evaluation and remediation of cognitive, affective, behavioral, or relational dysfunction in the context of marriage or family systems.”80 Against that standard we compared the Therapists Board rule au-thorizing therapists to provide a diagnostic assessment using the DSM “as part of their therapeutic role to help individuals identify their emotional, mental, and behavioral problems when necessary.”81 TMA conceded that the statutory authorization of evaluations included authorization for assessments, but it argued that the inclusion in the rule of the adjective diagnostic was a bridge too far. After looking to both traditional and medical dictionary definitions of the relevant terms to discern their “common, ordinary meanings ... within their statutory context”,82 we concluded that TMA was “mak[ing] too much of the rule’s use of the word ‘diagnostic.’ ”83

Critically, we looked to other Therapists Board rules to provide context for the rule that TMA was challenging. Our conclusion that TMA had not met its burden of demonstrating that the rule authorizing diagnostic assessments exceeded the statutory scope of practice was based in part on other rules limiting therapists to providing “services within [their] professional competency” and requiring referral of a client to another care provider when appropriate.84

An undercurrent of TMA’s argument in Marriage and Family Therapists was that any act within the statutory scope of medical practice must necessarily be excluded from the statutory scope of other healthcare professions. We rejected that line of thinking, explaining that “every act that a physician may do is not automatically the unlawful practice of medicine when done by a non-physician, and terminology in one field may overlap with that of another.”85 This principle is clear from the text of the MPA, which defines medical practice in the broadest terms possible— “the diagnosis[ ] [or] treatment” of any “mental or physical disease or disorder”, “physical deform-ity”, “or injury”86—and then exempts from the prohibition against unlawfully practicing medicine certain nonphysician healthcare providers “engaged strictly in the practice of” their professions as they are “defined by law”.87 Thus, the question in a § 2001.038(a) suit for judicial review of an agency rule regulating nonphysician healthcare providers is not whether any part of the rule authorizes a provider to engage in an activity that also constitutes the practice of medicine. Rather, the question is whether the plaintiff has overcome the presumption that the rule is valid by showing that any part of the rule either “contravenes specific ... language” of the regulated profession’s enabling statute or “runs counter to the general objectives of” that statute.88

B

The lower courts failed to apply this analysis, even though the court of appeals had the benefit of our decision in Marriage and Family Therapists and even though the legal principles we applied there broke no new ground. The trial court weighed evidence—specifically, witness testimony presenting each side’s view of the appropriate line between chiropractic and medical neurology—as if it were doing the Board’s work anew. The court’s findings of fact and conclusions of law make it clear that it failed to afford Rule 78.1 a presumption of validity. For example, the court found that “[t]here is no commonly accepted definition of musculoskeletal system that includes nerves”—implicitly crediting TMA’s evidence over the Board’s. TMA witnesses testified that strict anatomical lines delineate one system of the human body from another.89 Board witnesses testified that chiropractic takes a functional view of the body that does not permit the bio-mechanical condition of the muscles and bones that comprise the musculoskeletal system to be evaluated apart from the nerves that animate them. The court of appeals gave a nod to our analysis in Marriage and Family Therapists but then held that in light of the witness testimony presented by TMA, “sufficient evidence” supported the trial court’s judgment that Rule 78.1 exceeds the statutory scope of chiropractic.90 In so doing, the court applied an incorrect standard of review. The proper question for the court was whether, despite Rule 78.1’s presumption of validity, the rule contravenes the Act’s specific text or runs counter to its purpose as a matter of law.

With the Board, the Legislature has delegated to a regulated group of practitioners and public members the responsibility of “clarifying what activities are included within the scope of the practice of chiropractic and what activities are outside of that scope”,91 and it has required the Board in doing so to take measures beyond what is required by the APA to “seek input early in the rule development process” from the “persons who will be most affected” by it.92 Judges are experts in statutory analysis, not in healthcare. To prevent expensive and time-consuming usurpations of administrative agencies’ policymaking work, the court’s inquiry in a § 2001.038(a) suit challenging the validity of an agency rule must be limited. The textual analysis we set out in Marriage and Family Therapists ensures that courts will stay in their lane. To that analysis we now turn.

C

TMA contends that Rule 78.1(a)’s references to nerves exceed the Act’s scope of chiro-practic practice. Specifically, the rule’s definition of the statutory phrase musculoskeletal system includes not only bones, joints, muscles, tendons, and ligaments but also the “associated ... nerves that move the body and maintain its form.”93 And the rule defines the statutory phrase subluxation complex as a “neuromusculoskeletal condition” that can alter certain “neuro-physiological reflections”.94 TMA argues that these references to nerves authorize chiropractors to diagnose any neurological condition, which is the practice of medicine.

TMA’s argument echoes its position in Marriage and Family Therapists that a rule per-mitting therapists to make diagnostic assessments allows them to diagnose any mental disorder. But here, as was the case there, the rule’s words cannot be read beyond their context. Nothing in Rule 78.1 suggests that chiropractic practice extends beyond the evaluation and treatment of the musculoskeletal system. The rule merely acknowledges the reality that chiropractors cannot ignore the presence and effect of associated nerves that help shape the musculoskeletal system and allow it to move. The Board’s definition of musculoskeletal system only includes those nerves “associated” with the muscles, tendons, ligaments, bones, joints, and tissues “that move the body and maintain its form.” For Rule 78.1 to exceed its proper scope, the rule must contravene the Act’s specific words or purpose. It does neither. Nothing in the text of either definition gives chiropractors carte blanche to practice medical neurology, and the Board has rejected the notion that chiro-practic is so broad.

Though the Act contains some specific exclusions from chiropractic—“incisive or surgical procedures”, prescribing drugs, and using x-rays or other therapies that expose the body to radia-tion95—it certainly cannot be read to include all healthcare that it does not specifically exclude, and the Board makes no argument to the contrary. Because chiropractic is carved out of the com-prehensive regulation of the practice of medicine under the MPA, its scope under the Act must be limited. Rule 78.1 acknowledges and respects the Act’s boundaries.

The limited nature of Rule 78.1(a)’s definitions is clear when they are considered alongside other Board rules. Directly below the definitions of musculoskeletal system and subluxation complex, another section of Rule 78.1 defines chiropractic practice exactly as the Act does, word for word.96 The Rule also explains that Board licensees are expected to “provide necessary examina-tion and evaluation services” to “[d]ifferentiate a patient or condition for which chiropractic treat-ment is appropriate from a patient or condition that is in need of care from a medical or other class of provider.”97 Rule 79, governing “Unprofessional Conduct”, states that “[a] licensee shall ... timely refer a patient to another appropriate health care provider for a condition outside the scope of practice”98 and that “[a] licensee may not ... perform or attempt to perform proce-dures for which the licensee is untrained”.99 Licensees who engage in unprofessional conduct are “subject to disciplinary action.”100 Far from authorizing chiropractors to stray beyond the Act’s boundaries, the Board’s rules, taken together, seek to ensure that chiropractors remain inside them.

TMA argues that no commonly accepted definition of the musculoskeletal system includes nerves. But TMA over reads Rule 78.1. The rule merely recognizes the reality that musculoskeletal dysfunctions cannot be diagnosed or treated without considering associated nerves. Medical neurology is a far broader field. The Board argues that chiropractors must consider the nerves involved in a musculoskeletal system in order to determine whether referral to a neurologist is required. TMA characterizes this view as functional and argues that it ignores the fact that body systems are separate. But it is not for the judiciary to decide between these competing views. That decision was the Board’s, and it could reasonably consider neural involvement in the musculoskeletal system in defining the scope of chiropractic. TMA argues that the danger is that a chiropractor will not make a referral to a neurologist when one is required. But the answer to TMA’s concern is in Rule 79, which provides for professional discipline if that were to occur.

For all of these reasons, we conclude that TMA “makes too much” of the references to nerves in the Board’s definitions of musculoskeletal system and subluxation complex.101 TMA has not overcome the definitions’ presumption of validity by demonstrating that they contravene specific language in the Act or run counter to the Act’s objectives.102

D

TMA also challenges Rule 78.1(c)(3)(B)’s authorization for chiropractors who have completed specialized training to perform VONT. The technical language of the rule does not aid our statutory analysis. The parties describe VONT as a test that measures a patient’s eye movements with a camera or through electrodes, and they agree that it does not fall within any category of procedure that the Legislature has expressly excluded from the scope of chiropractic—VONT is not “incisive or surgical”; it does not require “the prescription of controlled substances”; and it does not “use ... x-ray therapy” or otherwise “expose[ ] the body to radioactive materials.”103 TMA presented evidence in the trial court that VONT is a neurological test that a medical doctor may use to diagnose a problem of the brain, inner ear, or eyes, none of which is a part of the spine or musculoskeletal system. Therefore, TMA argues, it exceeds the statutory scope of chiropractic for a chiropractor to perform VONT.

But the Board also presented evidence that VONT can be used to facilitate chiropractic treatment. One chiropractor witness, Frederick Carrick, D.O., testified by deposition that because spinal joints move reflexively opposite the direction of eye movements, VONT can “tell[ ] you the integrity of spinal musculature in reaction reflexogenically to an environmental perturbation” and “can be indispensable in [demonstrating] what side of the spine to treat”.104 The Board explains that a chiropractor can also use VONT to rule out nonchiropractic causes of certain disorders, which can help the chiropractor to determine whether chiropractic treatment is appropriate or whether the patient should be referred to another healthcare provider. The Board gives the example of a patient who comes to a chiropractor with dizziness, a common occurrence. Dizziness has numerous possible causes, many of which are outside the scope of chiropractic. But one possible cause is cervical vertigo—dizziness arising from head-and-neck misalignment, often the result of a sports injury or car accident—which can be treated with manual manipulation. The Board presented evidence that a negative VONT test can help to confirm a diagnosis of cervical vertigo by ruling out a problem in the brain, inner ear, or eyes, a process known as making a differential diagnosis.

Though the dissent agrees that Rule 78.1’s references to nerves in defining the musculo-skeletal system and the subluxation complex properly “clarify the Legislature’s scope-of-practice limitations”,105 it argues that the rule’s authorization of specially trained chiropractors to perform VONT exceeds these limitations. However, a reading of all the Board’s rules together makes it clear that a chiropractor’s proper use of VONT is not for treating a neurological condition, which is certainly outside the scope of chiropractic, but rather for the limited purpose of determining whether and how to treat a patient’s musculoskeletal system. The Legislature has authorized chi-ropractors “to diagnose ... the biomechanical condition of the spine and musculoskeletal system”.106 In Rule 78.1, which is presumptively valid, the Board has set out how a VONT test can be used to perform that diagnosis without exceeding the statutory scope of chiropractic. The dissent dramatically concludes that with the Rule’s limited authorization of VONT, “limitations on chiro-practic practice lose all meaning” and “[a] chiropractor’s practice becomes coextensive with a medical doctor’s practice”.107 But far from equating chiropractors and physicians, the Board’s rules in fact carefully observe the statutory boundary between the two professions.

The dissent also echoes TMA’s argument that the Act does not permit chiropractors to make differential diagnoses by ruling out possible neurological causes of a patient’s dysfunction. The dissent says that “[t]o ‘rule out’ a neurological condition based on a neurological examination is to say, affirmatively, that it is not a cause of the patient’s symptoms.”108 The accuracy of this characterization is questionable. A more realistic explanation of differential diagnosis is that it is the process every healthcare provider goes through when assessing a patient’s symptoms to deter-mine whether it is appropriate to treat the patient or refer the patient elsewhere. An unchallenged Board rule expressly addresses this process by requiring chiropractors to refer patients to other healthcare providers when appropriate.109 Yet the dissent would not allow this routine process to ever take place. The way the dissent sees it, any time a patient goes to a chiropractor with a gen-eralized problem like dizziness that could potentially have a cause outside the scope of chiroprac-tic, the chiropractor must immediately stop treatment and refer the patient to a medical doctor. There is no textual support for this argument in the Act.

Simply put, a healthcare provider cannot diagnose a problem without ruling out other potential causes of the problem. In other words, making a differential diagnosis is an unavoidable part of making a diagnosis. Virtually any problem that a chiropractor treats could potentially have a nonchiropractic source. Accepting the dissent’s position would effectively read into the Act a requirement that patients obtain a referral for chiropractic treatment when the Legislature has not imposed one.

In sum, the VONT-authorization rule is presumptively valid,110 no specific language in the Act forbids chiropractors from performing VONT, and the Board has articulated how a chiropractor might use the test “to diagnose, analyze, examine, or evaluate the biomechanical condition of the spine and musculoskeletal system”.111 Because a § 2001.038(a) suit challenges the facial va-lidity of an agency rule, that must be the end of the inquiry. The court of appeals reasoned that “[s]imply because [VONT] might under some circumstances be useful does not require that chi-ropractors be able to perform the test”.112 Whether VONT should be used by chiropractors is a policy judgment for the Legislature and the Board, not for the courts.113 The sole question for courts is whether the text or objectives of the Act forbid chiropractors from using VONT.114 We hold that they do not.

* * * * *

Applying the proper standard of review, we conclude that TMA has not carried its burden of demonstrating that the challenged provisions of Rule 78.1 contravene the specific text or the objectives of the Act. Accordingly, we reverse the judgment of the court of appeals in part and render judgment declaring that the challenged provisions are valid.

Footnotes

1

Tex. Bd. of Chiropractic Exam’rs v. Tex. Med. Ass’n, 375 S.W.3d 464, 467 (Tex. App.—Austin 2012, pet. denied). That case was a precursor to this one. The parties have appealed the underlying case three times to the court of appeals and twice to this Court. Each appeal to the court of appeals is styled Texas Board of Chiropractic Examiners v. Texas Medical Board. In order they are No. 03-12-00151-CV, 2012 WL 5974063 (Tex. App.—Austin Nov. 21, 2012, no pet.) (mem. op.); No. 03-14-00396-CV, 2014 WL 7014530 (Tex. App.—Austin Dec. 8, 2014, pet. denied) (mem. op.); and 566 S.W.3d 776 (Tex. App.—Austin 2018) (the decision below).

2

TEX. OCC. CODE §§ 201.001–201.606.

3

Id. § 201.002(b)(1)–(2).

4

See 22 TEX. ADMIN. CODE § 78.1(a)(5), (9).

5

See id. § 78.1(c)(3)(B) (providing that certain chiropractors may perform “Technological Instrumented Vestibular-Ocular-Nystagmus Testing” on patients).

6

Tex. State Bd. of Exam’rs of Marriage & Family Therapists v. Tex. Med. Ass’n, 511 S.W.3d 28, 41 (Tex. 2017).

7

566 S.W.3d 776 (Tex. App.—Austin 2018).

8

A brief summary of the history of chiropractic may be found on the American Chiropractic Association’s website. Origins and History of Chiropractic Care, AM. CHIROPRACTIC ASS’N, https://www.acatoday.org/About/His-tory-of-Chiropractic (last visited Jan. 24, 2021).

9

The word subluxation, built on the Latin luxatio, dislocation, means a partial dislocation. Subluxation, WEB-STER’S THIRD NEW INT’L DICTIONARY (1969).

10

28 TEX. ADMIN. CODE § 42.20(a).

11

TEX OCC. CODE §§ 151.001–170.003.

12

Id. § 151.002(13).

13

Id. § 152.001(a).

14

Id. § 155.001.

15

Id. § 151.052(1)–(2), (4)–(7).

16

Id. § 151.052(3).

17

Act of Apr. 21, 1949, 51st Leg., R.S., ch. 94, § 1, 1949 Tex. Gen. Laws 160, 160–161 (current version at TEX. OCC. CODE §§ 201.001–201.606). The Court of Criminal Appeals had invalidated prior legislation regulating chiropractic practice. See Ex parte Halsted, 182 S.W.2d 479, 488 (Tex. Crim. App. 1944).

18

Act of May 12, 1989, 71st Leg., R.S., ch. 227, § 1, 1989 Tex. Gen. Laws 1005, 1005 (current version at TEX. OCC. CODE §§ 201.002(b)(1)–(2)).

19

See Act of May 29, 1995, 74th Leg., R.S., ch. 965, § 13, 1995 Tex. Gen. Laws 4789, 4802 (current version at TEX. OCC. CODE §§ 201.002(b)(1)–(2)).

20

TEX. OCC. CODE § 201.002(b)(1)–(2).

21

Id. § 201.002(c)(1).

22

Id. § 201.002(a)(3).

23

Id. § 201.002(c)(2)–(3).

24

Id. § 201.1525.

25

See Act of Apr. 21, 1949, 51st Leg., R.S., ch. 94, § 4, 1949 Tex. Gen. Laws 160, 161–162 (“The Board may prescribe rules, regulations and bylaws in harmony with the provisions of this Act for its own proceedings and government for the examination of applicants for license to practice chiropractic.”) (current version at TEX. OCC. CODE § 201.1525).

26

Act of May 26, 1981, 67th Leg., R.S., ch. 781, § 4(d), 1981 Tex. Gen. Laws 2955, 2957 (current version at TEX. OCC. CODE § 201.1525).

27

Act of May 30, 1993, 73rd Leg., R.S., ch. 910, § 6, sec. 4(c), 1993 Tex. Gen. Laws 3834, 3837 (current version at TEX. OCC. CODE § 201.1525).

28

Act of May 29, 1995, 74th Leg., R.S., ch. 965, § 15, sec. 4(c), 1995 Tex. Gen. Laws 4789, 4802 (current version at TEX. OCC. CODE § 201.1525).

29

TEX. OCC. CODE § 201.152 (a)–(b).

30

Id. § 201.1525.

31

Id. § 201.051.

32

Id. § 201.051(a)(1).

33

See id. §§ 201.052–201.053.

34

Id. § 201.1526(a); see also TEX. GOV’T CODE § 2001.023(a) (requiring an agency to give notice of a pro-posed rule by publishing it in the Texas Register at least 30 days before its effective date); id. § 2001.024 (imposing detailed requirements for the content of the notice); id. § 2001.029 (requiring an agency to give “all interested persons a reasonable opportunity” to submit comments and, under certain circumstances, to hold a public hearing before adopting a substantive rule).

35

TEX. OCC. CODE § 201.1526(a)–(b).

36

31 TEX. REG. 8363–8364 (2006) (codified as an amendment to TEX. ADMIN. CODE § 75.16) (proposed Oct. 6, 2006).

37

22 TEX. ADMIN. CODE § 78.1(a)(5).

38

Id. § 78.1(a)(9).

39

31 TEX. REG. at 8363.

40

Id.

41

Id. at 8363–8364.

42

Id. at 8364.

43

22 TEX. ADMIN. CODE § 78.1(d)(1).

44

Tex. Bd. of Chiropractic Exam’rs v. Tex. Med. Ass’n, 375 S.W.3d 464, 495–496 (Tex. App.—Austin 2012, pet. denied).

45

35 TEX. REG. 9508, 9508 (2010) (to be codified as an amendment to 22 TEX. ADMIN. CODE § 75.17) (proposed Oct. 22, 2010) (adopting “an amendment to § 75.17 without changes to the proposed text as published” in the Texas Register on June 25, 2010). Rule 78.1(c)(3)(B) provides in full that

Technological Instrumented Vestibular-Ocular-Nystagmus Testing may be performed by a licensee with a diplomate in chiropractic neurology and that has successfully completed 150 hours of clinical and didactic training in the technical and professional components of the procedures as part of coursework in vestibular rehabilitation including the successful completion of a written and performance examination for vestibular specialty or certification. The professional component of these procedures may not be delegated to a technician and must be directly performed by a qualified licensee.

22 TEX. ADMIN. CODE § 781.(c)(3)(B).

46

Tex. Bd. of Chiropractic Exam’rs v. Tex. Med. Ass’n, No. 03-12-00151-CV, 2012 WL 5974063, at *1 (Tex. App.—Austin Nov. 21, 2012, no pet.) (mem. op.).

47

Compare 22 TEX. ADMIN. CODE § 78.1(a)(5), (a)(9), with TEX. OCC. CODE § 201.002(b)(1).

48

On interlocutory appeal, the court of appeals rejected the Board’s argument that TMA’s diagnosis complaint was a collateral attack on the final judgment in the prior case. Tex. Bd. of Chiropractic Exam’rs v. Tex. Med. Ass’n, No. 03-14-00396-CV, 2014 WL 7014530, at *1 (Tex. App.—Austin Dec. 8, 2014, pet. denied) (mem. op.).

49

566 S.W.3d 776, 785–787 (Tex. App.—Austin 2018) (citation omitted).

50

Act of May 22, 2017, 85th Leg., R.S., ch. 294, § 1, 2017 Tex. Gen. Laws 545, 545 (codified at TEX. OCC. CODE § 201.002(b)(1)).

51

566 S.W.3d at 787–788; see Tex. State Bd. of Exam’rs of Marriage & Family Therapists v. Tex. Med. Ass’n, 511 S.W.3d 28, 41 (Tex. 2017) (rejecting TMA’s challenge to an agency rule permitting therapists to provide diagnostic assessments as invading the practice of medicine).

52

TEX. GOV’T CODE § 2001.038(a).

53

TEX. OCC. CODE § 151.003.

54

Heckman v. Williamson Cty., 369 S.W.3d 137, 150 (Tex. 2012); DaimlerChrysler Corp. v. Inman, 252 S.W.3d 299, 304–305 (Tex. 2008). In Texas, the constitutional prerequisite of standing is grounded in the Open Courts and Separation of Powers provisions of the Texas Constitution. See TEX. CONST. art. I, § 13 (“All courts shall be open, and every person for an injury done him, in his lands, goods, person or reputation, shall have remedy by due course of law.”); id. art. II, § 1 (“The powers of the Government of the State of Texas shall be divided into three distinct departments, each of which shall be confided to a separate body of magistracy ... and no person, or collection of persons, being of one of these departments, shall exercise any power properly attached to either of the others ....”).

55

418 S.W.3d 566, 582 n.83 (Tex. 2013).

56

610 S.W.3d 763, 774 (Tex. 2020).

57

Id. (citing Dubai Petrol. Co. v. Kazi, 12 S.W.3d 71, 76–77 (Tex. 2000) (cleaned up)).

58

Pike, 610 S.W.3d at 774.

59

See Heckman v. Williamson Cty., 369 S.W.3d 137, 154–155 (Tex. 2012) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–561 (1992)). Texas has adopted the constitutional standing test employed by the federal courts.

60

Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 446 (Tex. 1993).

61

Fin. Comm’n of Tex. v. Norwood, 418 S.W.3d 555, 582 (Tex. 2013).

62

Tex. Ass’n of Bus., 852 S.W.2d at 447.

63

See Ass’n of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 152 (1970) (holding that organizations could demonstrate constitutional standing to challenge government action based on “alleg[ations] that [in-creased] competition” resulting from such official action “might entail some future loss of profits” for the firms rep-resented by the plaintiff organization).

64

In Texas Association of Business v. Texas Air Control Board, we adopted the three-part test for associational standing articulated by the Supreme Court of the United States: “(a) [the association’s] members would otherwise have standing to sue in their own right; (b) the interests [the association] seeks to protect are germane to the organization’s purpose; and (c) neither the claim asserted nor the relief requested requires participation of individual members in the lawsuit.” 852 S.W.2d at 447 (quoting Hunt v. Wash. State Apple Advert. Comm’n, 432 U.S. 333, 343 (1977)).

65

See Tex. State Bd. of Exam’rs of Marriage & Family Therapists v. Tex. Med. Ass’n, 511 S.W.3d 28, 33 (Tex. 2017).

66

Id. at 33 (quoting Edgewood Indep. Sch. Dist. v. Meno, 917 S.W.2d 717, 750 (Tex. 1995)).

67

See 566 S.W.3d 776, 781 (Tex. App.—Austin 2018).

68

Marriage & Family Therapists, 511 S.W.3d at 34.

69

Cf. Murphy Expl. & Prod. Co.-USA v. Adams, 560 S.W.3d 105, 109 (Tex. 2018) (explaining that when interpreting an oil-and-gas lease, “we may consider ‘objectively determinable facts and circumstances that contextualize the parties’ transaction’ and ‘inform’ the meaning of the language used” (quoting URI, Inc. v. Kleberg Cty., 543 S.W.3d 755, 758 (Tex. 2018))).

70

511 S.W.3d at 30.

71

Id. at 33.

72

Id.

73

Id. (quoting R.R. Comm’n of Tex. v. Lone Star Gas Co., 844 S.W.2d 679, 685 (Tex. 1992)).

74

Id.

75

Id. (quoting Edgewood Indep. Sch. Dist. v. Meno, 917 S.W.2d 717, 750 (Tex. 1995)).

76

Id.

77

Id. at 34.

78

459 S.W.3d 48, 52 (Tex. 2015) (citing TGS–NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432, 439 (Tex. 2011) (“Undefined terms in a statute are typically given their ordinary meaning, but if a different or more precise definition is apparent from the term’s use in the context of the statute, we apply that meaning.”)).

79

In re Hall, 286 S.W.3d 925, 929 (Tex. 2009) (orig. proceeding) (citing Tex. Dep’t of Transp. v. Needham, 82 S.W.3d 314, 318 (Tex. 2002)).

80

511 S.W.3d at 34 (quoting TEX. OCC. CODE § 502.002(6)).

81

Id. (quoting 22 TEX. ADMIN. CODE § 801.42(13)).

82

Id. at 38.

83

Id. at 37.

84

Id. at 39 (quoting 22 TEX. ADMIN. CODE § 801.44(r)).

85

Id. at 41.

86

TEX. OCC. CODE § 151.002(13).

87

Id. § 151.052.

88

Marriage & Family Therapists, 511 S.W.3d at 33. The third prong of the test—whether the challenged rule “imposes additional burdens, conditions, or restrictions in excess of or inconsistent with” the Act, id.—does not apply here because TMA argues that Rule 78.1 is too broad, not too narrow.

89

The trial court’s findings of fact adopt the view of TMA’s witnesses that the distinct systems of the human body are skeletal, muscular, nervous, cardiovascular, digestive, reproductive, urinary, endocrine, and integumentary (skin).

90

566 S.W.3d 776, 781 (Tex. App.—Austin 2018) (restating the legal analysis set forth in Marriage & Family Therapists); id. at 785–786 (reviewing the testimony and concluding that “sufficient evidence supports the [trial] court’s findings related to the [Scope of Practice] Rule’s reference to nerves ... in its definition of ‘musculoskeletal system’ [and] ‘subluxation complex’ ”); id. at 787 (affirming the trial court’s judgment that the VONT rule is invalid).

91

TEX. OCC. CODE § 201.1525.

92

Id. § 201.1526(b).

93

22 TEX. ADMIN. CODE § 78.1(a)(5).

94

Id. § 78.1(a)(9).

95

TEX. OCC. CODE § 201.002(c).

96

22 TEX. ADMIN. CODE § 78.1(b)(1).

97

Id. § 78.1(c)(1).

98

Id. § 79.2(a) (emphasis added).

99

Id. § 79.2(b) (emphasis added).

100

Id. § 79.2(c).

101

Marriage & Family Therapists, 511 S.W.3d at 37.

102

See id. at 34.

103

TEX. OCC. CODE § 201.002(c).

104

Dr. Carrick is licensed in New Hampshire and has never practiced in Texas. In fact, it appears that VONT is not widely used by Texas chiropractors. TCA maintains that since the Board’s adoption in 2010 of the rule approving VONT’s use, only two chiropractors in Texas have jumped through the regulatory hoops to receive Board authorization to use it.

105

Post at 6.

106

TEX. OCC. CODE § 201.002(b)(1).

107

Post at 8.

108

Id. at 9.

109

22 TEX. ADMIN. CODE § 79.2(a)(5).

110

Tex. State Bd. of Exam’rs of Marriage & Family Therapists v. Tex. Med. Ass’n, 511 S.W.3d 28, 33 (Tex. 2017).

111

TEX. OCC. CODE § 201.002(b)(1).

112

566 S.W.3d 776, 787 (Tex. App.—Austin 2018).

113

Marriage & Family Therapists, 511 S.W.3d at 33 (“[W]e must decide this case based on the relevant Texas statutes, not on whether MFTs are qualified to make DSM diagnoses or whether the DSM or other states’ laws allow them to.”).

114

See id.

Supreme Court of Texas.

BERKEL & COMPANY CONTRACTORS, INC., Petitioner,

v.

Tyler LEE, et al., Respondents

No. 18-0309

|

Argued September 15, 2020

|

OPINION DELIVERED: November 20, 2020

ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE FOURTEENTH DISTRICT OF TEXAS

Attorneys & Firms

Steven D. Selbe, Houston, Justin R. Gilbert, Angleton, Kyle A. Lawrence, Kurt Brynilde Arnold, Houston, Matthew Paul Skrabanek, Joshua S. Smith, Houston, Jonathan K. Findley, William Powers Jr., Austin, Russell S. Post, Houston, for Respondents.

Stuart J. Starry, Amicus Curiae for Martha Escobedo, Individually, and as Representative of The Estate of Fabian Escobedo, Escobedo, San Juanita, Escobedo, Primitivo.

Thomas C. Wright, Jessica Zavadil Barger, Brittany R. Greger, Garrett Gibson, Houston, Brian J. Cathey, Andrew T. McKinney IV, Randy E. Moore, Lake Jackson, Duane Douglas Mena II, Reagan W. Simpson, Houston, for Petitioner.

Ann E. Knight, Jeffrey L. Diamond, Houston, for Other interested party.

Opinion

Justice Bland delivered the opinion of the Court.

*1 The Texas Workers’ Compensation Act is the exclusive remedy for employees who sustain nonfatal work-related injuries.1 A narrow common-law exception exists, but the exception requires that the defendant have a specific intent to injure the plaintiff.2 Last term, we reaffirmed this principle: to satisfy the intentional-tort exception, “the employer must believe that its actions are substantially certain to result in a particular injury to a particular employee.”3 This degree of specificity is required, we said, to prevent a claim for intentional injury “from devolving into a standard of exceptionally egregious gross negligence,” which the Act precludes.4

In this suit arising under the exception to the Act, we again confirm that the substantial-certainty test established in Reed Tool Co. v. Copelin, 689 S.W.2d 404 (Tex. 1985), and reaffirmed last term in Mo-Vac Service Co. v. Escobedo, 603 S.W.3d 119 (Tex. 2020), requires that the defendant intend or know that its actions are substantially certain to injure a particular employee. The court of appeals held that the evidence in this case does not meet that level, and we agree with its conclusion. But on rehearing, it remanded the case for a new trial in the interest of justice because it adopted a new definition for intent in the workers’ compensation context.

Adhering to existing precedent, we rejected that new definition in Mo-Vac. Because Texas law remained unchanged during the pendency of this case, and the defendant in this case objected to the improper definition of intent in the court’s charge to the jury, we reverse that part of the court of appeals’ judgment remanding in the interest of justice.

I

Skanska USA Building, Inc. was the general contractor for a commercial construction project in Houston. Respondent Tyler Lee was Skanska’s lead superintendent for the project. Skanska subcontracted with petitioner Berkel & Company Contractors, Inc. to drill foundation pilings for a large office tower. Skanska required Berkel to participate in Skanska’s contractor-controlled insurance program, which provided uniform workers’ compensation benefits to workers on its worksite.

To construct the pilings, Berkel used a crane to drill a 130-foot auger into the ground, supported by 150-foot steel rods called “leads” that kept the auger straight. The auger had a hollow shaft, through which the Berkel crew pumped concrete grout as they slowly removed the auger from the ground.

On the day of the accident, the Berkel crew began a new piling without sufficient grout to finish it, in contravention of company policy. The grout hardened while the crew waited for more grout to arrive, and the auger stuck in the ground. Berkel’s foreman, Mark Stacy, instructed the crane operator, Andrew Bennett, to “bump” the auger: essentially, to rock the auger back and forth to try to free it from the hardening grout. After ten minutes of unsuccessful bumping, Stacy recommended that the operation be scuttled and restarted.

*2 Berkel’s superintendent, Chris Miller, overrode Stacy. Spewing invectives, Miller positioned himself next to the auger. He ordered Bennett to continue bumping the auger while pressuring the crane’s hoist cable to further try to loosen it. Witnesses testified that some of the crane’s rollers came off the ground, and the crane’s hydraulic lines began to spray fluid. Though Bennett testified that none of the crane’s alarms sounded, other crew members testified that they thought the situation was “a death trap,” were worried that “[s]omething [was] going to break and hurt somebody,” and prepared to protect themselves from injury. After fifteen to thirty minutes, the crane collapsed, knocking over the steel leads. Lee stood beyond the construction barrier at grade level, and one of the leads hit Lee as it fell. The lead crushed Lee’s leg, ultimately requiring that it be amputated.

Lee applied for and received workers’ compensation medical and disability benefits for his injuries under the contractor-controlled insurance program. As a participant in the workers’ compensation program, medical and disability benefits are available without any determination of fault.5 They are the exclusive remedy against an employer as defined under the Act for a covered worker who is injured on the job.6

Lee and his family sued Berkel for negligence and gross negligence, claiming that Berkel had waived its exclusive-remedy defense. The Lees later amended their petition to assert that Berkel, through Miller, had intentionally injured Lee. The Lees invoked the common-law intentional-injury exception to the Act this Court identified in Middleton v. Texas Power & Light Co., 108 Tex. 96, 185 S.W. 556 (1916). The arguments in this Court are limited to the intentional-injury exception.7

In the trial court, the parties disputed the definition of an “intentional” injury. Relying on established precedent, at the court’s charge conference Berkel requested that the trial court define “intent” to require that a Berkel employee intended to cause, or was substantially certain that he would cause, the injury to Lee.8 The Lees countered that for an injury to be “intentional” in the workers’ compensation context, the defendant need not have a specific intent to injure, nor direct the conduct at the plaintiff, but instead need merely believe that an injury is “substantially certain to result.” The Lees prevailed; the jury charge asked whether “a Berkel employee ... believe[d] that injury was substantially certain to result from his conduct on the date in question?” The jury answered “yes,” and awarded damages to the Lees. The trial court entered judgment on the jury’s verdict.

The court of appeals reversed, holding that the trial court’s charge erred in asking whether a Berkel employee knew that an unspecified injury—unattached to any particular victim or any particular location—was substantially certain to result.9 This was error, the court of appeals held, because the intentional-injury exception always has had a “specific-consequences requirement.”10 Adopting a comment from the Third Restatement, it held that the charge should have asked “whether a Berkel employee acting in the course and scope of his employment believed that his conduct was substantially certain to bring about harm to a particular victim, or to someone within a small class of potential victims within a localized area.”11 Because the answer to the question was “no”—no evidence showed that anyone at Berkel knew the lead would fall onto Lee—the court of appeals held there was legally insufficient evidence to support a finding of intentional injury.12 The court rendered judgment for Berkel.

*3 On rehearing, the divided panel amended its judgment and remanded the case for another trial in the interest of justice. Because one part of its holding—its localized-area gloss—was new and “no appellate decision had examined in detail the requirements of the substantial-certainty test” in the context of a jury charge, the court remanded to allow “an opportunity to establish and present evidence under our clarified standard.”13 Justice Donovan dissented, observing that the court of appeals had applied well-established existing precedent, set forth more than 30 years ago in Reed Tool Co.14

Berkel petitioned for review, seeking reversal of the court of appeals’ remand order. Lee cross-appealed, seeking reinstatement of the jury’s verdict, or alternatively, that we affirm the remand. We granted review on motion for rehearing, shortly after deciding Mo-Vac, another intentional-injury case.

II

The Texas Workers’ Compensation Act is the exclusive remedy for a covered employee who seeks recompense for injury claims against the employer.15 It does not permit a suit for an employer’s grossly negligent conduct unless that conduct causes a fatal injury.16 As we explained in Mo-Vac, a central purpose of workers’ compensation is to promote certainty and speed in resolving work-related injury claims.17 Workers’ compensation insurance provides medical and disability benefits without regard to the fault of either the injured worker or the employer.18 The court of appeals held that Berkel was Lee’s co-employer and thus Lee’s injury claim fell within the exclusive-remedy provision of the Act. As a co-employer, the court of appeals determined that Berkel cannot be sued for negligence or gross negligence. The Lees do not challenge that aspect of the court of appeals’ holding.

When an employer commits an intentional tort, however, a common-law exception exists.19 Therefore, to recover against Berkel, the Lees must prove that Berkel intentionally caused Lee’s injury. We agree with the court of appeals that the Lees did not adduce legally sufficient evidence to demonstrate that a Berkel crew member intended to injure Lee, and that the trial court’s jury charge did not properly define intent.

In reviewing the legal sufficiency of the evidence, we evaluate “whether the evidence at trial would enable reasonable and fair-minded people to reach the verdict under review.”20 Because Berkel properly preserved error by objecting to the trial court’s intentional-injury charge, we evaluate the sufficiency of the evidence against the charge the trial court should have given.21

A

As they did in the trial court, the parties dispute the proper definition of an intentional injury. We recently examined that definition in Mo-Vac, and our holding in that case controls the outcome here. In Mo-Vac, we upheld the trial court’s summary judgment in favor of the employer because the evidence failed to raise a fact issue as to intent.22 To satisfy the intentional-tort exception, “the employer must believe that its actions are substantially certain to result in a particular injury to a particular employee, not merely highly likely to increase overall risks to employees in the workplace.”23

*4 Over Berkel’s objection, the court’s charge in this case did not properly define intent. Instead of asking whether a Berkel employee specifically intended that his conduct injure Lee, or knew with substantial certainty that his conduct would injure Lee, the jury charge asked whether a Berkel employee believed “injury was substantially certain to result.” The court of appeals correctly held that the trial court’s submission did not accurately reflect Texas law.

In reviewing the verdict, however, the court of appeals adopted a localized-area test, implicitly defining intent to include knowledge of dangerous conditions that will eventually cause an injury, if that knowledge is specific to a particular time and small class of individuals. As we recounted in Mo-Vac, our Court “effectively rejected” that broader definition of intent and the localized-area test for intentional injury more than 30 years ago in Reed Tool, in which we held that the employer must have knowledge that the conduct at issue will injure a particular employee.24 From Reed Tool on, Texas has held that dangerous conduct, standing alone, does not support a finding of intent.25 Rather, an employer must “believe[ ] his conduct is substantially certain to cause the injury.”26

The intentional-injury exception to the Workers’ Compensation Act originates in the Texas Constitution’s open courts guarantee, and we have held that the Legislature effectively adopted the exception when it revised the Act in 1989.27 The parties do not contend that the Act is rendered unconstitutional without broadening the meaning of intent to injure as existing precedent has defined it. In tacitly accepting the intentional-injury exception, the Legislature chose not to allow suits for nonfatal injuries caused by the type of gross negligence that the evidence presents here.

The court of appeals correctly concluded that the evidence is legally insufficient to support a finding that Berkel intended to cause Lee’s injury. Based on the evidence, a properly instructed jury could have concluded that Miller deliberately ignored the risk of a collapse. But no evidence supports an inference that Miller—described by a witness as standing “where everything was falling”—believed the equipment would break and collapse, and that it was destined to collapse on top of Lee, who stood beyond the construction barricade at grade level.

*5 As the court of appeals observed, there is no evidence that Miller knew Lee’s location; Miller was below-grade.28 While one crew member testified that he “thought [Miller’s] operation was exposing [the crew] to danger,” none predicted what form that danger would take or the injury that it would cause. As another crew member testified: “I knew—I knew something—something has got to give. [...] A cable is going to break. The boom is going to break. The auger is going to break. The bolt is going to pull out, you know, anything.” He could predict that “someone might be injured,” but not who or how or when. This testimony confirms the substantial uncertainty that Miller’s actions would cause a lead to crush Lee’s leg.

B

In this Court, the Lees do not challenge the conclusion that no evidence suggests that a Berkel employee knew that he would injure Lee. They ask instead that we apply the doctrine of transferred intent to support the jury’s finding. They direct us to Prosser and Keeton:

The actor who fires a bullet into a dense crowd may fervently pray that the bullet will hit no one, but if the actor knows that it is unavoidable that the bullet will hit someone, the actor intends that consequence.

W. PAGE KEETON ET AL., PROSSER AND KEETON ON THE LAW OF TORTS § 8, p. 35 (5th ed. 1984). Though the evidence might not show that a Berkel employee knew that he would injure Lee, they posit, it surely suggests that one knew that he would injure someone.

Assuming that transferred intent may establish an intent to injure, there is not legally sufficient evidence of it here.29 Though the evidence suggests that injury could result because Miller ordered the operator to overstress the auger and crane, no evidence suggests anyone knew how or whom the crane would injure. About ten people were within the fall radius of the crane’s boom—an area about the size of two football fields. There is no evidence that Miller knew or believed that his orders to continue attempting to free the auger would unavoidably result in the crane or the leads collapsing atop someone. No evidence exists that Miller or another Berkel crew member believed his actions were substantially certain to injure any particular person.

Rather, the evidence shows that Miller was grossly negligent—he was aware of an extreme risk and nevertheless proceeded in complete disregard for the safety or welfare of others at the worksite.30 Miller ordered his crew to continue operating a crane under stress, over repeated objections from others. Miller proceeded against Berkel’s own safety procedures, at risk to everyone in the fall radius of the crane and the leads. But Miller did not plan or intend for the equipment to collapse on Lee. By his grossly negligent actions, he nonetheless caused it to happen.

*6 The Workers’ Compensation Act does not permit a suit for gross negligence unless that gross negligence resulted in the employee’s death.31 Courts cannot expand the remedies afforded to an injured worker who receives workers’ compensation benefits beyond that which the Legislature has afforded.32 We conclude, like the court of appeals, that the Lees cannot recover against Berkel based on the facts presented.

III

The final question is whether the court of appeals erred in remanding this case in the interest of justice. A court of appeals “must render the judgment that the trial court should have rendered, except when ... the interests of justice require a remand for another trial.”33 Because the rules grant the court of appeals the discretion to determine when the cause of justice is served by a remand, we will only reverse that determination when the court of appeals abuses its discretion—that is, when it acts arbitrarily, unreasonably, or without reference to legal principles.34

The court of appeals remanded the case based on its adoption of a localized-area limitation from the Third Restatement, a test that we rejected in Mo-Vac. The clarification of the law justifying the court of appeals’ remand thus no longer exists.35 Acknowledging as much, the Lees ask that we exercise our own discretion to remand in the interest of justice.36 However, we have no more basis to remand the case than the court of appeals.

First, Berkel proposed, and the Lees rejected, a definition of intent to injure consistent with Reed Tool and reaffirmed in Mo-Vac. The Lees thus were on notice that their submission did not reflect the existing definition of intent in the workers’ compensation context because their proposed definition did not ask whether a Berkel crew member knew with substantial certainty that he would cause Lee’s injury.37 The Lees had sufficient opportunity to fully develop evidence of Miller’s knowledge that Lee, specifically, would be injured. The Lees knew Berkel’s position on the specific-victim requirement, based on established precedent. If the Lees had additional evidence regarding Miller’s specific intent and knowledge, they had no incentive to withhold it.

*7 Second, our holding in Mo-Vac did not change or clarify Texas law. The “most compelling case” for a remand in the interest of justice “is where we overrule existing precedents on which the losing party relied at trial.”38 The Lees contend that the court of appeals’ opinion demonstrates that the law was not clear for submission of the case to the jury.39 Unsuccessfully urging the expansion of existing law, however, does not create a lack of clarity. The Lees urged in the trial court that the localized-area limitation in the Third Restatement supported a jury charge that did not require a finding that a Berkel employee knew that he would injure Lee. But at the time of trial, no court—in Texas or elsewhere—had adopted that position. Though the Lees advocated for an expansion of Texas law in the trial court, the Lees did not rely on existing precedent that our Court later clarified or disavowed.

Mo-Vac’s holding that “the employer must believe that its actions are substantially certain to result in a particular injury to a particular employee, not merely highly likely to increase overall risks to employees in the workplace,”40 reaffirms the holding in Reed Tool that “the intentional failure to furnish a safe place to work does not rise to the level of intentional-injury except when the employer believes his conduct is substantially certain to cause the injury.”41 As we said in Reed Tool and again in Mo-Vac, the determinative factor must be “not the gravity or depravity of the employer’s conduct but rather the narrow issue of intentional versus accidental quality of the injury.”42 The evidence adduced at trial confirms that the crane collapse was an accident—an avoidable, unjustifiable, and grossly negligent accident—falling short of “genuine intentional injury.”43

* * *

Under the intentional-injury exception to the Workers’ Compensation Act, the plaintiff must prove that the employer believed that its actions were substantially certain to injure the plaintiff. The court of appeals correctly concluded that the evidence in this case does not show that a Berkel employee knew that he would cause a falling lead to injure Lee. Because the definition of intentional injury in the workers’ compensation context remains unchanged under Texas law, a remand in the interest of justice is not appropriate. Accordingly, we affirm the court of appeals’ judgment notwithstanding the verdict, reverse its remand in the interest of justice, and render judgment for Berkel.

Justice Lehrmann and Justice Busby did not participate in the decision.

Footnotes

1

TEX. LAB. CODE § 408.001(a).

2

Reed Tool Co. v. Copelin, 689 S.W.2d 404, 406 (Tex. 1985).

3

Mo-Vac Serv. Co. v. Escobedo, 603 S.W.3d 119, 130 (Tex. 2020).

4

Id.

5

Id. at 128.

6

TEX. LAB. CODE § 408.001(a).

7

The court of appeals held that the exclusive-remedy provision of the Workers’ Compensation Act barred the Lees’ negligence claims. Berkel & Co. Contractors, Inc. v. Lee, 543 S.W.3d 288, 296 (Tex. App.—Houston [14th Dist.] 2018).

8

Berkel further contends in this Court that the Lees also cannot prevail because the evidence does not demonstrate that Miller or any member of the Berkel crew that day was a vice-principal of the company. Because we hold that Berkel otherwise prevails, we need not address this argument.

9

543 S.W.3d at 308.

10

Id. at 300–01.

11

Id. at 301.

12

Id. at 304–08.

13

Id. at 308.

14

Id. at 309 (Donovan, J., dissenting) (citing Reed Tool Co. v. Copelin, 689 S.W.2d 404, 407 (Tex. 1985)).

15

TEX. LAB. CODE § 408.001(a).

16

Id. at § 408.001(b).

17

Mo-Vac v. Escobedo, 603 S.W.3d 119, 128 (Tex. 2020).

18

Id. at 124.

19

Medina v. Herrera, 927 S.W.2d 597, 600 (Tex. 1996).

20

City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005).

21

St. Joseph Hosp. v. Wolff, 94 S.W.3d 513, 530 (Tex. 2002).

22

603 S.W.3d at 132.

23

Id. at 130.

24

Id. at 128 (citing Reed Tool Co. v. Copelin, 689 S.W.2d 404, 407 (Tex. 1985)). The Third Restatement recognizes that a conflict exists among jurisdictions as to whether an employer intentionally causes injury in the workers’ compensation context when “the employer has created a very dangerous job-site condition that the employer knows will eventually bring about an employee injury.” RESTATEMENT (THIRD) OF TORTS: PHYS. & EMOT. HARM § 1 cmt. a. The Restatement’s localized-area limitation adopted by the court of appeals applies to jurisdictions that embrace a broader definition of substantial certainty than the narrow common-law exception to the Act that Texas has adopted. The limitation winnows “eventual employee injury” to injuries that comprise “a small number of identifiable employees during a relatively limited period of time.” Id., § 1 cmt. e. But to embrace this “limitation” in Texas would expand substantial certainty beyond what we historically have recognized as an intentional injury in the workers’ compensation context.

25

Reed Tool, 689 S.W.2d at 408.

26

Id. at 407 (emphasis added).

27

Medina v. Herrera, 927 S.W.2d 597, 600 (Tex. 1996) (citing Middleton v. Texas Power & Light Co., 108 Tex. 96, 185 S.W. 556, 560 (1916)).

28

Berkel & Co. Contractors, Inc. v. Lee, 543 S.W.3d 288, 305 (Tex. App.—Houston [14th Dist.] 2018).

29

Traditionally, transferred intent is more akin to a scenario we discussed in Mo-Vac:

The second Restatement uses a bomb hypothetical to illustrate the substantial-certainty test for intent. RESTATEMENT (SECOND) OF TORTS § 8A cmt. b, illus. 1 (1965) (“A throws a bomb into B’s office for the purpose of killing B. A knows that C, B’s stenographer, is in the office. A has no desire to injure C, but knows that his act is substantially certain to do so. C is injured by the explosion. A is subject to liability to C for an intentional tort.”). We think the better category for this example is purpose because the actor deliberately intended the harmful consequence to those present in the room.

603 S.W.3d at 129 n.53. For the purposes of this case, this is a distinction without difference, as there is no evidence that Miller deliberately intended a harmful consequence to anyone.

30

See Medina v. Zuniga, 593 S.W.3d 238, 247–48 (Tex. 2019) (summarizing gross negligence as requiring an act or omission that objectively presents an extreme degree of risk as well as the actor’s subjective conscious indifference to the safety or welfare of others); see also STATE BAR OF TEXAS, TEXAS CIVIL PATTERN JURY CHARGES PJC 4.2A (2018) (“ ‘Gross negligence’ means more than momentary thoughtlessness, inadvertence, or error of judgment. It means such an entire want of care as to establish that the act or omission in question was the result of actual conscious indifference to the rights, welfare, or safety of the persons affected by it.”).

31

TEX. LAB. CODE § 408.001(b).

32

See Reed Tool, 689 S.W.2d at 407 (“The continued effectiveness of the worker’s compensation scheme depends on the continued ability to spread the risk” of losses arising from accidental injuries.).

33

TEX. R. APP. P. 43.3.

34

See, e.g., In re Mahindra, USA Inc., 549 S.W.3d 541, 550 (Tex. 2018) (“The abuse of discretion standard is ‘typically applied to procedural ... determinations’ and ‘is especially appropriate when the trial court must weigh competing policy considerations and balance interests.’ ” (quoting In re Doe, 19 S.W.3d 249, 253 (Tex. 2000))); Cire v. Cummings, 134 S.W.3d 835, 838–39 (Tex. 2004) (“The test for an abuse of discretion is ... ‘whether the court acted without reference to any guiding rules and principles,’ ” and a court’s exercise of its discretion will not be reversed unless “it was arbitrary or unreasonable.” (quoting Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241 (Tex. 1985))); cf. Sears, Roebuck & Co. v. Marquez, 628 S.W.2d 772, 773 (Tex. 1982) (per curiam) (holding that the court of appeals abused its discretion in ordering remand in the interest of justice where the trial court’s judgment was errorless).

35

See Berkel & Co. Contractors, Inc. v. Lee, 543 S.W.3d 288, 308 (Tex. App.—Houston [14th Dist.] 2018).

36

See TEX. R. APP. P. 60.3.

37

In a post-submission letter, the Lees suggest that an opinion in Harris County Flood Control District v. Kerr, 499 S.W.3d 793 (Tex. 2016), that was later withdrawn shows uncertainty about a specificity requirement for the substantial-certainty test. That opinion issued after the trial in this case; the Lees did not rely on it in constructing the charge.

38

Westgate, Ltd. v. State, 843 S.W.2d 448, 455 (Tex. 1992) (compiling cases); see also Nat. Gas Pipeline Co. of Am. v. Justiss, 397 S.W.3d 150, 162 (Tex. 2012) (“[W]e have remanded a case to the trial court when we have changed our precedent or when the applicable law has otherwise evolved between the time of trial and the disposition of the appeal.”); Boyles v. Kerr, 855 S.W.2d 593, 603 (Tex. 1993) (“Remand is particularly appropriate where the losing party may have presented his or her case in reliance on controlling precedent that was subsequently overruled.”).

39

See Torrington Co. v. Stutzman, 46 S.W.3d 829, 841 (Tex. 2000) (“Because neither this Court nor any other appellate court had written about the proper submission of an undertaking claim at the time this case was tried, it is appropriate to remand this case in the interest of justice.”).

40

Mo-Vac Serv. Co. v. Escobedo, 603 S.W.3d 119, 130 (Tex. 2020).

41

Reed Tool Co. v. Copelin, 689 S.W.2d 404, 407 (Tex. 1985).

42

Mo-Vac, 603 S.W.3d at 126 (quoting Reed Tool, 689 S.W.2d at 407).

43

Id. (quoting Reed Tool, 689 S.W.2d at 406).

Supreme Court of Texas.

TEXAS MUTUAL INSURANCE COMPANY, Hartford Underwriters Insurance Company, TASB Risk Management Fund, Transportation Insurance Company, Truck Insurance Exchange, Twin City Fire Insurance Company, Valley Forge Insurance Company, et al., Petitioners,

v.

PHI AIR MEDICAL, LLC, Respondent

No. 18-0216

|

Argued February 25, 2020

|

OPINION DELIVERED: June 26, 2020

Opinion

Justice Busby delivered the opinion of the Court, in which Justice Guzman, Justice Lehrmann, Justice Boyd, Justice Devine, and Justice Blacklock joined.

*1 This is a case about federalism. When joining our Union, each State retained fundamental aspects of its sovereignty. This sovereignty includes the police power to provide a compensation system for injured workers. Although the Federal Government can preempt a State’s exercise of sovereignty by enacting an inconsistent federal law on a subject within its constitutionally enumerated powers, it has no power to order that State to regulate the subject in a particular way. The questions presented here include (1) whether Texas’s exercise of its police power to require that private insurance companies reimburse the fair and reasonable medical expenses of injured workers is preempted by a federal law deregulating aviation; and, if so, (2) whether that federal law requires Texas to mandate reimbursement of more than a fair and reasonable amount for air ambulance services.

We answer both questions no. As to the first, because Texas’s general reimbursement standards do not refer expressly to air ambulance providers like respondent PHI, they are preempted by the federal Airline Deregulation Act (ADA) only if they have a “forbidden significant effect upon fares.” Morales v. Trans World Airlines, Inc., 504 U.S. 374, 388, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992). The record does not show that the price of PHI’s service to injured workers is significantly affected by a reasonableness standard for third-party reimbursement of those services, so the ADA does not preempt that standard.

Regarding the second question, the relief PHI seeks through preemption is an order requiring the insurance company petitioners to reimburse its billed charges fully under Texas law. This request misunderstands the nature and scope of federal preemption of state law.

Courts agree that the ADA does not require States to provide for payment of air ambulance charges. Instead, PHI is trying to use the ADA’s preemption clause to have it both ways under state law: PHI relies on Texas law requiring that private insurers reimburse it for air ambulance services to injured workers, yet it argues that the Texas standards governing the amount of that reimbursement are preempted. The Supreme Court of the United States unequivocally rejected this stratagem in Dan’s City Used Cars, Inc. v. Pelkey, observing that any preemption under a similarly worded federal law would displace the entire state-law regime. 569 U.S. 251, 265, 133 S.Ct. 1769, 185 L.Ed.2d 909 (2013). Thus, PHI would be substantially worse off if it succeeded on its preemption claim, as insurers would no longer have any obligation to reimburse it at all.

Moreover, PHI’s attempt to use federal preemption to compel full reimbursement under state law runs headlong into the Tenth Amendment to our Federal Constitution. As the federal anticommandeering doctrine recognizes, Congress lacks the power to change state law. Litigants cannot invoke preemption to avoid this constraint, which is fundamental to the structure of our government.

For these reasons, we hold that the ADA does not preempt Texas’s general standard of fair and reasonable reimbursement as applied to air ambulance services, nor does it require that Texas compel private insurers to reimburse the full charges billed for those services. We therefore reverse the judgment of the court of appeals and reinstate the trial court’s judgment declaring that Texas law is not preempted.

I

*2 PHI Air Medical, LLC is one of the country’s leading providers of emergency air ambulance services, and it has significant operations in Texas. PHI is licensed to operate as an air carrier by the Federal Aviation Administration and as an air taxi by the United States Department of Transportation. PHI is thus subject to federal oversight, including laws and regulations that address safety and unfair or anti-competitive practices. See, e.g., 49 U.S.C. § 41712(a); 14 C.F.R. pt. 135. But PHI need not obtain a certificate of public convenience and necessity or comply with the associated federal economic regulations. See 14 C.F.R. § 298.3(a)–(b) (2005).

Upon the request of first responders or medical professionals, PHI provides its services without regard to a patient’s insurance status or ability to pay. See 25 Tex. Admin. Code § 157.36(b)(9)–(10), (14). In recent years, PHI alleges its costs have risen; simultaneously, it says, payors in the industry—often insurers—have increasingly sought to avoid paying PHI’s billed charges in full. These factors and others,1 PHI claims, have pressed PHI to raise prices to sustain itself. The amount that air ambulance providers may recover from workers’ compensation insurers forms the basis of this dispute.

A

In 1913, the Texas Legislature enacted the Texas Workers’ Compensation Act (TWCA) to respond “to the needs of workers, who, despite escalating industrial accidents, were increasingly being denied recovery.” SeaBright Ins. v. Lopez, 465 S.W.3d 637, 642 (Tex. 2015) (quoting Kroger Co. v. Keng, 23 S.W.3d 347, 349 (Tex. 2000)). In enacting the TWCA, the Legislature balanced two competing interests: providing compensation for injured employees and protecting employers from the costs of litigation. Id. The Legislature struck a balance between these interests by permitting workers to “recover from subscribing employers without regard to the workers’ own negligence” while “limiting the employers’ exposure to uncertain, possibly high damages awards permitted under the common law.” Id. The TWCA thus “allows employees to receive ‘a lower, but more certain, recovery than would have been possible under the common law.’ ” Id. (quoting Kroger Co., 23 S.W.3d at 350). The Legislature revamped the TWCA in 1989 and created the Texas Workers’ Compensation Commission—now the Division of Workers’ Compensation at the Texas Department of Insurance—to implement and enforce its provisions. Tex. Workers’ Comp. Comm’n v. Patient Advocates of Tex., 136 S.W.3d 643, 646–47 (Tex. 2004) (citing TEX. LAB. CODE § 402.061).

Under the TWCA, employers may purchase insurance from private companies to cover workers who are injured on the job. When PHI transports an injured worker covered by such insurance, Title 5 of the Texas Labor Code and its associated regulations apply. See LAB. CODE §§ 401.007–419.007. A health care provider that treats injured workers, like PHI, has a direct statutory claim for reimbursement from a workers’ compensation insurer, id. § 408.027(a), and the provider may contract with the insurer to determine the amount of reimbursement. Id. § 413.011(d-4). Absent a contract, the reimbursement amount is governed by fee guidelines promulgated by the Division. Id. §§ 413.011, .012. These guidelines establish maximum reimbursement amounts for providers. Id. § 408.028; 28 Admin. Code § 134.1(a).

When the Division has not adopted an applicable guideline, the insurer must reimburse the provider for its services up to a “fair and reasonable” amount. LAB. CODE § 413.011(d);2 28 Admin. Code § 134.1(a), (e)–(f).3 If the insurer does not reimburse the full amount of the provider’s billed charges, the provider generally may not “balance bill” its customer—the covered worker—directly for the unpaid portion. See LAB. CODE § 413.042. A provider dissatisfied with the amount an insurer pays may seek review by the Division. Id. § 413.031(a). In turn, a party who disagrees with the Division’s ruling is entitled to a contested case hearing conducted by the State Office of Administrative Hearings and, ultimately, to judicial review. Id. § 413.031(k), (k-1).

B

*3 Until 2012, when this dispute arose, insurers had been reimbursing PHI for its services at 125% of the Medicare rate for air ambulance services, citing the Division’s fee guideline for providers other than hospitals and pharmacies. See 28 Admin. Code § 134.203(d)(1). But in 2012, PHI and other air ambulance providers began filing fee disputes with the Division, seeking to recover the full amount of their billed charges. This particular suit represents a fraction of the air ambulance fee disputes pending agency review: it concerns thirty-three transports that PHI provided between 2010 and 2013 to patients covered by workers’ compensation insurance. No contract between PHI and the insurers of those thirty-three patients (petitioners here) sets a predetermined reimbursement amount.4

Before the Division, PHI argued that the federal ADA preempted the TWCA’s fee schedules and reimbursement standards. According to PHI, the effect of ADA preemption was to require that the insurers pay its billed charges in full. The Division agreed. But an administrative law judge (ALJ) disagreed following a contested case hearing, holding that the ADA did not preempt the TWCA and its reimbursement scheme. The ALJ relied on the McCarran-Ferguson Act, a federal statute that saves or “reverse-preempts” state laws regulating the business of insurance. See 15 U.S.C. §§ 1011–15. Having held that the McCarran-Ferguson Act rendered ADA preemption inoperative, the ALJ concluded that PHI was entitled to reimbursement under the TWCA’s standards.

Concerning the amount of reimbursement required, PHI argued that it should receive the full amount of its billed charges and that the amount previously paid by the insurers—125% of the Medicare air ambulance rate—would reflect a loss on each transport. The insurers argued that 125% of the Medicare rate was appropriate under rule 134.203, the Division’s fee guideline for providers other than hospitals and pharmacies. See 28 Admin. Code § 134.203.5 Alternatively, the insurers argued that 125% of the Medicare rate was a fair and reasonable fee for PHI’s services.

The ALJ agreed with PHI that the Division’s fee guidelines do not set reimbursement rates for air ambulances at 125% of Medicare.6 As the parties had no contractual rate, the ALJ held that a fair and reasonable rate—which he determined to be 149% of the Medicare rate for air ambulances—must be paid. 28 Admin. Code §§ 134.1(e)(3), .203(d)(3), (f); see also LAB. CODE § 413.011(d).

*4 After the ALJ rendered a final decision, PHI and the insurers sought judicial review. Each requested a declaratory judgment regarding preemption. The insurers also challenged the conclusion that 149% of the Medicare reimbursement rate was fair and reasonable for these transports. The Division intervened, siding with the insurers in opposing preemption. All parties moved for summary judgment.

Following a hearing, the trial court denied PHI’s motion for summary judgment and granted summary judgment for the Division and the insurers. The court declared that the ADA does not preempt the TWCA’s reimbursement provisions and that the insurers did not owe more than 125% of the Medicare amount. PHI appealed and the court of appeals reversed, holding that the TWCA’s reimbursement provisions are preempted by the ADA and are not saved by the McCarran-Ferguson Act. 549 S.W.3d 804, 809, 816 (Tex. App.—Austin 2018). The Division and the insurers sought our review, and we granted their petitions.

II

A

In this Court, the parties again dispute whether the ADA preempts the TWCA’s reimbursement provisions and, if so, whether the McCarran-Ferguson Act reverse-preempts those provisions because they regulate the business of insurance. Because we conclude that the ADA does not preempt the TWCA’s reimbursement scheme, we do not decide whether the McCarran-Ferguson Act applies.

Whether the ADA preempts the TWCA’s reimbursement guidelines is a question of law we review de novo. See Thompson v. Tex. Dep’t of Licensing & Regulation, 455 S.W.3d 569, 571 (Tex. 2014) (per curiam); Baker v. Farmers Elec. Co-op., 34 F.3d 274, 278 (5th Cir. 1994) (“Preemption is a question of law reviewed de novo.”). “When both sides move for summary judgment and the trial court grants one motion and denies the other, the reviewing court should review both sides’ summary judgment evidence and determine all questions presented.” FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000). The reviewing court should render the judgment that the trial court should have rendered. Id.

B

“Federal preemption of state law follows from the Framers’ core commitment to dual sovereignty, which is a defining feature of our Nation’s constitutional blueprint.” Air Evac EMS, Inc. v. Cheatham, 910 F.3d 751, 760 (4th Cir. 2018) (cleaned up). “The Constitution limited but did not abolish the sovereign powers” the States claimed in declaring their independence, leaving them “a residuary and inviolable sovereignty.” Murphy v. Nat’l Collegiate Athletic Ass’n, ––– U.S. ––––, 138 S. Ct. 1461, 1475, 200 L.Ed.2d 854 (2018) (quoting THE FEDERALIST No. 39, at 245 (Clinton Rossiter ed., 1961)). Our constitutional structure “indirectly restricts the States by granting certain legislative powers to Congress” and including a Supremacy Clause—a “rule of decision” instructing “that when federal and state law conflict, federal law prevails and state law is preempted.” Id. at 1476, 1479.

When acting within its enumerated powers, “Congress’s choices range from complete reliance on state policy to complete preemption of state law, with many iterations of ‘cooperative federalism’ between these extremes.” Air Evac, 910 F.3d at 761. Yet congressional power is limited, and “all other legislative power is reserved for the States, as the Tenth Amendment confirms.” Murphy, 138 S. Ct. at 1476. “[C]onspicuously absent from the list of powers given to Congress is the power to issue direct orders to the governments of the States.” Id.

*5 The States’ retained police powers include the power to provide a compensation system for injured workers, as Texas has done. See Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 524, 101 S.Ct. 1895, 68 L.Ed.2d 402 (1981).7 In many States, a government entity acts as the employers’ insurer, paying benefits to injured workers and reimbursing certain expenses they have incurred. In Texas, however, employers contract with private insurance carriers to perform these functions, and state laws and regulations define the insurers’ obligations to reimburse health care providers for their services to covered workers. See LAB. CODE § 406.051. Each insurance policy incorporates these laws and regulations, obligating the insurer to pay the benefits they require.

The following Texas laws and regulations are particularly relevant to our analysis of PHI’s preemption challenge. Under the TWCA, as explained above, a health care provider like PHI has a direct claim for reimbursement from an insurer. Id. § 408.027(a). Because the ALJ determined the Division has no fee guideline for air ambulance services, the insurers are required to reimburse PHI for its services up to a “fair and reasonable” amount. See id. § 413.011(d); 28 Admin. Code §§ 134.1(a), (e)–(f), .203(d)(3), (f). The insurers reimbursed PHI less than the full amount of its billed charges, and the parties dispute whether the amount the insurers reimbursed is fair and reasonable. Given the TWCA’s prohibition against “balance billing,” PHI has not billed its customers—the covered workers—for the remainder. See LAB. CODE § 413.042.

According to PHI, the federal act deregulating the airline industry (the ADA) expressly preempts Texas’s laws and regulations requiring insurers to reimburse it a fair and reasonable amount for air ambulance services; therefore, it is entitled to an order compelling the insurers to reimburse its billed charges fully under state law. The court of appeals erred in agreeing with PHI for two reasons. As Part III shows, the federal ADA does not preempt the Texas fair and reasonable standard for reimbursement. Yet even if the ADA had that preemptive effect, it does not—and, as a constitutional matter, could not—provide PHI the remedy it seeks, as we explain in Part IV.

III

A

“In 1978, Congress enacted the ADA, which deregulated the airline industry in order to encourage market competition, lower prices, advance innovation and efficiency, and increase the variety and quality of air transportation services.” Sabre Travel Int’l, Ltd. v. Deutsche Lufthansa AG, 567 S.W.3d 725, 737 (Tex. 2019). “To ensure that the States would not undo federal deregulation with regulation of their own,” Congress included an express preemption clause. Morales, 504 U.S. at 378, 112 S.Ct. 2031. The clause provides that “a State ... may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier.” 49 U.S.C. § 41713(b)(1).

The insurers do not challenge the power of Congress to preempt state law on this subject. Rather, the first disputed question is whether this clause preempts the particular Texas laws and regulations PHI challenges here. To answer that question correctly, it is important to be clear about what PHI is challenging and what it is not.

In this Court, PHI only briefs a challenge to Texas’s general “fair and reasonable” standard, which defines how much of PHI’s charges to its customers the insurers are obligated to reimburse. PHI is not presently challenging Texas’s prohibition on PHI balance billing its customer directly.8 In other words, PHI would rather be paid by the insurers than by its customers. This choice is understandable, as insurers are likely more able to pay and balance billing has become a subject of national concern. See Air Evac, 910 F.3d at 757. But the choice does have consequences for our preemption analysis, as we explain below.

*6 The preemption inquiry before us is whether the state laws and regulations setting a general fair and reasonable reimbursement standard for third-party insurers are “related to a price ... of an air carrier.” 49 U.S.C. § 41713(b)(1). The ordinary meaning of “related to” is broad, reaching state provisions that have “a connection with or reference to” air carrier prices even if they are not “specifically addressed to the airline industry” or their “effect is only indirect.” Morales, 504 U.S. at 384, 386, 388, 112 S.Ct. 2031. But the reach of this statutory language is not unlimited, and “some state actions may affect airline fares in too tenuous, remote, or peripheral a manner” to be preempted. Id. at 390, 112 S.Ct. 2031 (cleaned up). For example, the ADA did not deregulate reimbursement for air-related medical care generally,9 and PHI does not argue that the ADA preempts the maximum fees States have set for reimbursement of air ambulance services rendered to customers covered by the federal Medicaid program.10

To help courts determine whether a particular state action falls on the preempted or non-preempted side of this relatedness line, the U.S. Supreme Court has developed the following test: state provisions that “express[ly] reference” air carrier prices and establish “binding requirements” are preempted. Id. at 388, 112 S.Ct. 2031. But the ADA preempts state provisions of general applicability only if they “have the forbidden significant effect upon fares.” Id.

The Supreme Court has reiterated this test and extended it to another similarly worded federal preemption statute. Rowe v. N.H. Motor Transp. Ass’n, 552 U.S. 364, 370–71, 375, 128 S.Ct. 989, 169 L.Ed.2d 933 (2008).11 And the Fifth Circuit and federal courts nationwide have applied the Supreme Court’s test consistently, including in cases like this one involving state rules for reimbursement of air ambulance services. Hodges v. Delta Airlines, Inc., 44 F.3d 334, 336 (5th Cir. 1995) (en banc) (“Laws of general applicability, even those consistent with federal law, are preempted if they have the ‘forbidden significant effect’ on rates....”); see also, e.g., Air Evac, 910 F.3d at 767; Bailey v. Rocky Mountain Holdings, LLC, 889 F.3d 1259, 1271 (11th Cir. 2018); EagleMed LLC v. Cox, 868 F.3d 893, 902 (10th Cir. 2017) (“[T]he court only needs to decide whether a particular state law or claim has a ‘forbidden significant economic effect on airline rates ...’ when the state law at issue does not ‘expressly refer to airline rates ...’ itself.”); Buck v. Am. Airlines, Inc., 476 F.3d 29, 34–35 (1st Cir. 2007); Travel All Over the World, Inc. v. Saudi Arabia, 73 F.3d 1423, 1433 (7th Cir. 1996).12

Here, Texas’s fair and reasonable standard for reimbursement is generally applicable: it does not reference air carrier prices. We therefore apply the Supreme Court’s settled preemption test, asking whether that standard has the forbidden significant effect on PHI’s prices. Morales, 504 U.S. at 388, 112 S.Ct. 2031.

B

*7 On this record, we conclude PHI has not shown that the fair and reasonable standard for third-party reimbursement has a significant effect on its prices for carrying injured customers by air. If we were analyzing the prohibition on PHI billing its customers (unchallenged here), it would be logical to expect that prohibition to have a significant effect on PHI’s prices. But it is not at all clear that adopting a reasonableness standard for reimbursement by third parties, standing alone, has a significant effect on the price of PHI’s services to its customers. We recently explained in Sabre Travel that “[i]ncreasing an airline’s cost does not automatically lead to a corresponding increase in airline ticket prices.” 567 S.W.3d at 738. The same is true of limiting an air carrier’s reimbursement: PHI must come forward with evidence proving that those limits have a significant effect on price to obtain a summary judgment of preemption.

PHI disagrees, arguing that “price” as used in the ADA’s preemption clause includes the amount a third party may reimburse it for its services. That blanket rule not only disregards PHI’s burden on summary judgment, it distorts the meaning of “price” and would expand the scope of ADA preemption dramatically, leading to absurd results.

In 1994, the Legislature defined “price” in the ADA to mean “a rate, fare, or charge.” 49 U.S.C. § 40102(a)(39). As dictionary definitions show, these terms concern how much one charges or pays for a good or service.13 To the extent the terms are concerned with who charges or pays a price, the parties to the exchange are determined by the transactional relationship.14 Here, the parties to the transaction are PHI and the injured customer it transports by air ambulance.

PHI has no transactional relationship with a third-party insurer, which simply receives PHI’s bill for services already rendered to an injured customer covered by the policy and determines how much it will reimburse PHI on that customer’s behalf. Again, evidence might show that the reimbursement rate has a significant effect on the price of the air ambulance service, but the reimbursement rate is not itself part of the price PHI charges to transport customers, as PHI contends.

The following example illustrates the results that would follow from PHI’s blanket rule. The State Bar of Texas—an administrative agency that is part of our judicial branch15—has a policy that it will reimburse speakers at its continuing legal education courses for “airline travel at coach rates,” but “such expenses [must] be reasonable according to the usual cost of products or services for which reimbursement is requested as determined by similar reimbursement requests of other participants, by practices applicable to other public agencies and institutions of the State of Texas, by other readily available reference information, and by State Bar staff experience,” as well as “location[ ] and other circumstances.”16 Thousands of state agencies nationwide likely have similar reasonableness standards for reimbursement of airfares. Because this standard dictates the amount the State Bar will reimburse for air carrier services, it would be preempted under PHI’s approach.17

*8 As the Supreme Court’s test instructs, we should focus instead on the record of this case to determine whether Texas’s fair and reasonable reimbursement standard for workers’ compensation insurers has a significant effect on air ambulance prices. PHI does take note of the record, observing that the fair and reasonable reimbursement amounts determined by the trial court and some administrative actors were less than the full amount it billed. This observation misses the mark for both legal and factual reasons.

Legally, the full amount billed for air ambulance services is not the starting point for measuring significant effect. As two federal circuits have explained, the ADA does not guarantee “any payment of air-ambulance claims whatsoever,” EagleMed, 868 F.3d at 906, much less payment of “whatever an air carrier may demand.” Air Evac, 910 F.3d at 769. Moreover, the billed amount generally is not the product of a transactional relationship, as PHI’s injured customer has not agreed to pay it. See Ferrell v. Air EVAC EMS, Inc., 900 F.3d 602, 608–10 (8th Cir. 2018) (discussing injured customer’s argument that he did not assent to price before his transport). Absent an agreement on price, the law implies a fair or reasonable price: exactly the same standard Texas has adopted for determining reimbursement. See id. at 608–10 (explaining that result of air ambulance provider’s suit against customer who did not agree to pay billed amount would be to recover fair or reasonable value of services provided); Bendalin v. Delgado, 406 S.W.2d 897, 900 (Tex. 1966) (discussing rule that when parties fail to specify price, courts presume “that a reasonable price was intended”).

Nor do the facts bear out PHI’s position that it would recover significantly less for its services under the fair and reasonable reimbursement standard. The Division concluded that the full amount billed by PHI was fair and reasonable. The ALJ disagreed. Finding that the average amount paid to PHI for services in Texas during the relevant period was 149% of the reimbursement amount under federal Medicare regulations, the ALJ held this figure was a fair and reasonable amount for workers’ compensation insurers to reimburse PHI for its services to covered employees. The trial court reduced this figure to 125% of Medicare, which was the price that PHI agreed to charge the one customer with which it had a contract. The court of appeals did not reach this issue.

Thus, under the fair and reasonable standard, it is possible that the amount of PHI’s reimbursement for carrying covered workers could be either (1) the full amount PHI billed, (2) the average price PHI is paid for air ambulance services, or (3) a price PHI bargained for in the market. These possibilities show that the fair and reasonable standard does not have a significant effect on PHI’s prices. Under Morales, therefore, the ADA does not preempt that state reimbursement standard.

C

PHI offers little authority to support its position that a State’s general reasonableness standard for workers’ compensation reimbursements has a significant effect on air ambulance prices and thus is preempted by the ADA. Although some federal circuits have found preemption of workers’ compensation rules regarding air ambulance services in other States, those cases are different in three key respects: (1) the state rules at issue expressly referenced air ambulance prices, triggering a different part of the Morales preemption test; (2) the rules established a maximum fee cap and thus significantly affected air ambulance prices; or (3) the air ambulance service challenged a prohibition on billing its customer directly. The reasoning employed by those courts supports a holding of no preemption here.

*9 For example, PHI relies heavily on the Tenth Circuit’s decision in EagleMed v. Cox. There, the Wyoming Workers’ Compensation Division set a rate schedule under which it reimbursed a maximum amount of “$3,900.66 plus $27.47 per statute mile” for air ambulance services. 868 F.3d at 898. EagleMed challenged this schedule as well as a statutory prohibition on directly “billing the injured employee for the expenses incurred.” Id. at 900. The court held the ADA preempted these provisions because they “expressly establish a mandatory fixed maximum rate that will be paid by the State for air-ambulance services,” and thus there was no need to apply the Morales significant-effect standard. Id. at 902.

The challenge to direct billing was critical to the court’s analysis. It reserved judgment on whether preemption would apply if Wyoming gave air ambulance companies an option to seek reimbursement at scheduled rates or to pursue a claim against its customer directly. Id. at 901. And it concluded that if the Wyoming statute were read “to prevent air-ambulance companies from seeking [payment] from the workers themselves,” it “would be illegally regulating air-ambulance rates by preventing any recovery from air-ambulance passengers, and the proper remedy would seem to be the preemption of this statute.” Id. at 906 n.3.

This analysis exposes a critical flaw in PHI’s preemption argument. If any part of the Texas workers’ compensation reimbursement scheme significantly affects air ambulance prices, it is the prohibition on PHI billing its customer for the price of his or her flight, not reasonableness standards for third-party reimbursement.18 PHI cannot obtain preemption of the latter by strategically declining to challenge the former in this Court. There are larger principles of federalism at stake here. Whether the Supremacy Clause displaces state law regulating a subject within its reserved powers should be decided by considering the state statutory and regulatory scheme as a whole, not just the particular provision that an individual litigant prefers to challenge.

The Fourth Circuit reached a similar conclusion in Air Evac EMS, Inc. v. Cheatham regarding West Virginia’s reimbursement scheme. The state adopted a fee schedule of reimbursement rates for air ambulance services, backed up by statutes providing that those rates “are the maximum allowable recovery” and customers “cannot be billed directly.” 910 F.3d at 758. The court concluded that these provisions were related to air ambulance prices and thus preempted because they “directly reference air ambulance payments,” establish “maximum amounts that the state will pay directly to air-ambulance providers, and limit the ability of those providers to seek recovery from anyone else.” Id. at 767 (citations omitted).

As in EagleMed, however, the Air Evac court did not address “whether the fee schedule could be maintained without either the reimbursement caps [fixing a maximum allowable recovery] or [the customer] balance-billing provisions.” Id. at 769 n.3. That is the situation presented here, as Texas does not have fixed maximum reimbursement limits and PHI is not challenging the balance-billing prohibition. Indeed, the Texas system is even less likely to impact price, as it uses a reasonableness standard—not a fee schedule—to determine reimbursement for air ambulance services.

Finally, the Eleventh Circuit’s decision in Bailey v. Rocky Mountain Holdings is instructive because it identifies Florida’s “balance billing provision” as the “feature” of the state scheme that “has a significant effect on air carrier prices.” 889 F.3d at 1270. There, the court upheld an ADA preemption challenge to part of Florida’s no-fault auto insurance law regarding air ambulance services. That law allowed the insured to choose one of two methods for determining reimbursement: (1) the insurer would reimburse 80% of reasonable expenses for medically necessary services, and the provider could bill the insured for the remainder of the reasonable fee; or (2) the insurer would reimburse 80% of the fee listed in the Medicare fee schedule, and the provider generally could not balance bill the insured. Id. at 1262–63. The insured’s policy elected that reimbursement would be paid according to the second method, and the insurer accordingly reimbursed the air ambulance provider an amount less than its reasonable charges. Id. at 1263.

*10 The court held this second method had the “forbidden significant effect” on air carrier prices because “the balance billing provision ... reduces as a matter of law the contract price of [air carrier] services to [insured] patients,” limiting the provider to a scheduled maximum fee that was less than a reasonable fee. Id. at 1270–71. Texas’s fact-driven standard—which requires insurers to pay 100% of fair and reasonable charges—has no such effect, and PHI is not challenging the balance-billing prohibition.

In sum, these cases show that PHI’s challenge is misdirected. Each case supports our conclusion that the ADA does not preempt the Texas laws and regulations requiring third-party insurers to reimburse PHI a fair and reasonable amount for services rendered to covered workers.

IV

If the ADA did preempt these reimbursement provisions, PHI contends it is entitled to an order requiring the insurers to reimburse its billed charges fully under state law. The court of appeals appeared to agree with PHI, concluding that “the specific rate-setting provisions at issue” could be severed from the overall Texas reimbursement scheme. 549 S.W.3d at 812 n.10.

We disagree with the court of appeals for two reasons. First, if ADA preemption applies, neither state nor federal law provides for full reimbursement of air carrier bills—or for any reimbursement at all. Second, the effect of federal preemption cannot be that States must provide full reimbursement, as that outcome would violate the Tenth Amendment. For these reasons, the result of ADA preemption here would not be full reimbursement—it would be no reimbursement.

A

How much of Texas reimbursement law would ADA preemption displace? Under PHI’s preemption analysis, the ADA would override all state reimbursement law as applied to air ambulance services. PHI maintains that the amount the insurer will pay for air ambulance services relates to the price of an air carrier, and therefore a reimbursement scheme dictating that amount is preempted. But if a state standard requiring reasonable third-party reimbursement is “related to” air carrier prices, 49 U.S.C. § 41713(b)(1), so is a standard requiring any other amount of reimbursement—including full reimbursement.

A full-reimbursement standard could not be spared preemption on the theory that it is consistent with the federal scheme. “Nothing in the language of § [41713(b)(1) ] suggests that its ‘relating to’ pre-emption is limited to inconsistent state regulation.” Morales, 504 U.S. at 386–87, 112 S.Ct. 2031. Rather, the ADA’s “pre-emption provision ... displaces all state laws that fall within its sphere, even including state laws that are consistent with [the ADA’s] substantive requirements.” Id. at 387, 112 S.Ct. 2031; see also Rowe, 552 U.S. at 370, 128 S.Ct. 989 (“[I]n respect to pre-emption [under such a provision], it makes no difference whether a state law is ‘consistent’ or ‘inconsistent’ with federal regulation.”); Hodges, 44 F.3d at 336. Given the comprehensive scope of ADA preemption, the court of appeals was incorrect to indicate that portions of the Texas reimbursement scheme could be saved by severance.

Put differently, PHI cannot have it both ways: it cannot rely on state law requiring reimbursement of air carriers while arguing that a particular state standard for measuring that reimbursement is preempted. The U.S. Supreme Court rejected that very argument in Dan’s City Used Cars. 569 U.S. at 265, 133 S.Ct. 1769. There, a towing company relied on New Hampshire law in disposing of a car for nonpayment of towing and storage fees. Id. at 255, 133 S.Ct. 1769. The car’s owner alleged the company did not comply with the law’s requirements for disposal and application of proceeds, and he sued for compensation. Id. at 258–59, 133 S.Ct. 1769. The company contended that a preemption clause similar to the ADA’s blocked the owner’s claims because they “related to” the “service of a[ ] motor carrier ... with respect to the transportation of property.” Id. at 264–66, 133 S.Ct. 1769 (citing 49 U.S.C. § 14501(c)(1)).

*11 The Supreme Court disagreed, explaining that “if such state-law claims are preempted, no law would govern resolution of a [disposal dispute] or afford a remedy for wrongful disposal,” as “[f]ederal law does not speak to these issues.” Id. at 265, 133 S.Ct. 1769. The company’s preemption position would eliminate not only the owner’s remedy but also “the sole legal authorization for a towing company’s disposal [of vehicles] that go unclaimed. No such design can be attributed to a rational Congress.” Id. “In sum,” the Court said, the company “cannot have it both ways. It cannot rely on [the state] regulatory framework as authorization for [disposal] of [the owner’s] car, yet argue that [the owner’s] claims, invoking the same state-law regime, are preempted.” Id.

Similarly here, if the ADA preempts a state reimbursement scheme dictating the amount an insurer will reimburse, it also preempts the scheme’s requirement that insurers provide reimbursement.19 Nor can PHI rely on federal law to compel reimbursement, as courts agree that “[f]ederal law establishes no duty for states to pay”—or require insurers to pay—“the air-ambulance claims of injured workers who are covered by state workers’ compensation statutes.” EagleMed, 868 F.3d at 906 (noting federal law lacks requirement “to make any payment ... whatsoever, much less payment at whatever rates [air ambulance carriers] choose to charge”); accord Air Evac, 910 F.3d at 769. In particular, the Tenth Circuit held in EagleMed that the district court erred in “placing an affirmative duty on state officials to reimburse in full all air-ambulance claims” because “any such possible duty would exist as a creation only of state, not federal, law.” 868 F.3d at 906. There is simply no authority for the notion that Congress, in deregulating the airline industry, was regulating the terms of state workers’ compensation insurance policies.

In addition, like the company’s contention in Dan’s City, PHI’s preemption position would irrationally leave the parties without any governing law or available remedy. As decisions of this Court and the U.S. Supreme Court recognize, federal airline regulators and federal courts are neither authorized nor equipped to take the place of state regulators and courts in handling issues regarding private insurers’ reimbursement of air ambulances for their services to covered workers. “When Congress dismantled [the federal airline regulatory] regime, ... [it] indicated no intention to establish, simultaneously, a new administrative process for DOT adjudication of private contract disputes.” Am. Airlines, Inc. v. Wolens, 513 U.S. 219, 232, 115 S.Ct. 817, 130 L.Ed.2d 715 (1995). “Nor is it plausible that Congress meant to channel into federal courts the business of resolving, pursuant to judicially fashioned federal common law, the range of contract claims relating to airline rates, routes, or services.” Id.

In sum, the parties “lack ... any vehicle for resolving” disputes over reimbursement “other than state court lawsuits” decided under state law. Cont’l Airlines, Inc. v. Kiefer, 920 S.W.2d 274, 280 (Tex. 1996). If that law is preempted, then there is no requirement for reimbursement at all. The court of appeals’ suggestion that limits on reimbursement are severable—allowing PHI to obtain reimbursement of its full billed charges—cannot be reconciled with the scope of ADA preemption as defined by the Supreme Court.

As the insurers point out, requiring full reimbursement could have serious consequences for the Texas workers’ compensation system. According to the insurers, almost $50 million in Texas air ambulance charges were already in dispute by January 2019, and PHI’s operating profit margin on its full billed charges ranges from 185% to 282%. In Wyoming, which has held that only limits on reimbursement are preempted,20 the legislature is considering either expanding Medicaid in order to control such charges or making injured workers responsible for the balance of their bills.21 The ADA was passed to deregulate the airline industry, not to upend the bargain struck in adopting a workers’ compensation scheme. As we have explained, there is no reason to interpret the ADA to have that effect.

B

*12 Finally, PHI cannot be correct that the effect of ADA preemption is to compel full reimbursement under state law, as that is not a permissible result of preemption in our federal system. If the Federal Government does not like state regulation of a subject that also falls within Congress’s enumerated powers, the Supremacy Clause allows it to override that regulation with duly enacted laws of its own. See U.S. CONST. art. VI, para. 2. But nowhere in the Constitution did the States give the Federal Government the power to order them to change their own laws, as the Tenth Amendment confirms. See U.S. CONST. amend. X (“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”).

“The anticommandeering doctrine ... represents the recognition of this limit on congressional authority.” Murphy, 138 S. Ct. at 1476. The doctrine acknowledges that the “Constitution ... confers upon Congress the power to regulate individuals, not States.” New York v. United States, 505 U.S. 144, 166, 112 S.Ct. 2408, 120 L.Ed.2d 120 (1992). “Where a federal interest is sufficiently strong to cause Congress to legislate, it must do so directly....” Id. at 178, 112 S.Ct. 2408. “Congress may not simply commandeer the legislative processes of the States by directly compelling them to enact and enforce a federal regulatory program.” Id. at 161, 112 S.Ct. 2408 (cleaned up). Thus, “even where Congress has the authority under the Constitution to pass laws requiring or prohibiting certain acts, it lacks the power directly to compel the States to require or prohibit those acts.” Id.

As the anticommandeering doctrine shows, courts deciding preemption challenges may not rewrite preempted state law so that it conforms to federal law. Here, state law requires reasonable reimbursement, and the federal ADA contains no reimbursement requirement. Contrary to PHI’s contention, the result of ADA preemption cannot be to grant it full reimbursement under state law. That result would amount to an illegal end run around the constitutional anticommandeering doctrine. Thus, even if PHI’s preemption position were otherwise correct, it cannot constitutionally obtain the relief it seeks.

V

For these reasons, we hold PHI has not shown that Texas’s fair and reasonable reimbursement standard for air ambulance services has a significant effect on its prices, and therefore the ADA does not preempt that standard. And even if ADA preemption applied, it would displace the very reimbursement requirement on which PHI relies. We therefore reverse the court of appeals’ judgment, reinstate the portion of the trial court’s summary judgment declaring no preemption, and remand for the court of appeals to address other issues it did not reach. See TEX. R. APP. P. 60.2(c), (d).

Justice Bland filed a concurring opinion, in which Justice Lehrmann, Justice Boyd, and Justice Blacklock joined.

Justice Green filed a dissenting opinion, in which Chief Justice Hecht joined.

Justice Bland, joined by Justice Lehrmann, Justice Boyd, and Justice Blacklock, concurring.

The Texas Workers’ Compensation Act “directly regulate[s] the ‘business of insurance’ by prescribing the terms of the insurance contract” and the parties’ performance of those terms.1 The Act obligates insurance carriers to directly remit payments to policy claimants according to state-prescribed insurance policies. This dispute centers on the Act’s mandated claim process for one such policy claimant—an air-ambulance service.

*13 The McCarran–Ferguson Act is a federal law that insulates state insurance laws from federal preemption. Because the Texas Legislature enacted the Workers’ Compensation Act “for the purpose of regulating the business of insurance,”2 McCarran–Ferguson saves the challenged provisions from federal preemption. The court of appeals concluded otherwise. Accordingly, I concur in reversing its judgment.

I

McCarran–Ferguson saves from preemption any state law enacted “for the purpose of regulating the business of insurance”:

No Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance, or which imposes a fee or tax upon such business, unless such Act specifically relates to the business of insurance: Provided, That after June 30, 1948, the Act of July 2, 1890, as amended, known as the Sherman Act, and the Act of October 15, 1914, as amended, known as the Clayton Act, and the Act of September 26, 1914, known as the Federal Trade Commission Act, as amended, shall be applicable to the business of insurance to the extent that such business is not regulated by State law.3

Congress enacted McCarran–Ferguson to address the concern that federal preemption had made “inroads ... on the tradition of state regulation of insurance.”4 It “was an attempt ... to assure that the activities of insurance companies in dealing with their policyholders would remain subject to state regulation.”5 As the Supreme Court has recognized, “Congress’ purpose was broadly to give support to the existing and future state systems for regulating and taxing the business of insurance.”6 Thus, McCarran–Ferguson is a “reverse-preemption” statute.7

*14 McCarran–Ferguson precludes preemptive application of a federal statute if “(1) the federal statute does not specifically relate to the ‘business of insurance,’ (2) the state law was enacted for the ‘purpose of regulating the business of insurance,’ and (3) the federal statute operates to ‘invalidate, impair, or supersede’ the state law.”8 Only the second element is in dispute in this case. Thus, we examine whether the Texas Legislature enacted the Texas Workers’ Compensation Act “for the purpose of regulating the business of insurance,” such that McCarran–Ferguson protects its insurance-reimbursement provisions from federal encroachment.

II

A

“[D]etermining a state’s purpose in enacting a law is fundamental to ... [McCarran–Ferguson’s] inquiry.”9 Under our “well-established rules for discerning a statute’s purpose, ... ‘[w]e determine legislative intent from the entire act and not just isolated portions.’ ”10 Thus, we consider the Texas Workers’ Compensation Act as a whole, together with the position and role of the challenged provisions found within it.11

In SEC v. National Securities, Inc., the Supreme Court recognized that state laws that govern “the type of policy” together with “its reliability, interpretation, and enforcement” constitute “core” insurance activities:

Congress was concerned with the type of state regulation that centers around the contract of insurance.... The relationship between insurer and insured, the type of policy which c[an] be issued, its reliability, interpretation, and enforcement—these [are] the core of the “business of insurance.” Undoubtedly, other activities of insurance companies relate so closely to their status as reliable insurers that they to[o] must be placed in the same class.12

Thus, “[s]tatutes aimed at protecting or regulating this relationship, directly or indirectly, are laws regulating the ‘business of insurance.’ ”13

United States Department of Treasury v. Fabe is the key case that examines McCarran–Ferguson’s first clause, which is “intended to further Congress’ primary objective of granting the States broad regulatory authority over the business of insurance.”14 In Fabe, the Court considered whether an Ohio claim-priority statute governing bankrupt insurers’ obligations was enacted “for the purpose of regulating the business of insurance.”15 The Court held that it was: the statute “escape[d] pre-emption” because it was “ ‘aimed at protecting or regulating’ the performance of an insurance contract.”16 The Court emphasized that Congress, in enacting McCarran–Ferguson, made clear its “mission” to protect “continued regulation” by the states.17 It observed that, even though “the Ohio statute does not directly regulate the ‘business of insurance’ by prescribing the terms of the insurance contract or by setting the rate charged by the insurance company,” the “business of insurance” is not “confined entirely to the writing of insurance contracts, as opposed to their performance.”18 Accordingly, the Court concluded that “[t]here can be no doubt that the actual performance of an insurance contract falls within the ‘business of insurance.’ ”19 McCarran–Ferguson thus shields state laws that prescribe either the terms or the performance of insurance contracts.

*15 The petitioners here—the Texas Division of Workers’ Compensation and participating workers’ compensation insurers—have a stronger case than the Ohio respondents in Fabe.

B

The Texas Workers’ Compensation Act is a comprehensive regulatory structure for insurance carriers, employers, employees, health care providers, and others who claim benefits under a workers’ compensation policy.20 “Insurance company” is a defined term. Under the Act, it “means a person authorized and admitted by the Texas Department of Insurance to do insurance business in this state under a certificate of authority that includes authorization to write workers’ compensation insurance.”21 As we have recognized, “[i]n creating the Texas Workers’ Compensation Act, the Legislature carefully balanced competing interests—of employees subject to the risk of injury, employers, and insurance carriers—in an attempt to design a viable compensation system, all within constitutional limitations.”22 Workers’ compensation policies in Texas are, inherently, insurance; they are issued by private carriers, and those carriers in turn provide state-mandated coverage. Thus, “[t]he contract between a compensation carrier and an employee creates the same type of special relationship that arises under other insurance contracts”23 And “[r]ecovery of workers’ compensation benefits is the exclusive remedy of an employee covered by workers’ compensation insurance coverage.”24

The Legislature has authorized the Texas Department of Insurance to oversee the workers’ compensation system.25 “Among the[ ] requirements [of the Texas Workers’ Compensation Act] is the legislative directive that only workers’ compensation policies approved by the Texas Department of Insurance are available in Texas.”26 A mainstay of the Act is that insurance carriers are “liable for compensation for an employee’s injury without regard to fault or negligence,” including state-prescribed medical benefits for covered employees who are injured on the job.27 The Division regularly reviews insurers’ records “to ensure compliance” with the Workers’ Compensation Act and the commissioner’s rules.28 As part of this state-mandated system of insurance, insurance carriers and health care providers claiming reimbursement are heavily regulated.29 By dictating the benefits that these insurance policies must afford, the Legislature regulates insurance policy terms. Participating insurance companies thus “contract to secure an employer’s liability and obligations and to pay compensation by issuing a workers’ compensation insurance policy.”30 The “contract for coverage must be written on a policy and endorsements approved by the Texas Department of Insurance.”31 Accordingly, “[t]he terms of worker’s compensation insurance policies include provisions of the worker’s compensation statutes.”32

*16 Like the Workers’ Compensation Act as a whole, the specific provisions challenged in this case regulate the business of insurance. These payment provisions require an insurance carrier to remit an amount determined by the Division under the coverage afforded.33 An insurance carrier must remit this payment directly to a claimant like PHI Air Medical, LLC, the air-ambulance service provider in this case.34

As PHI Air concedes, the Workers’ Compensation Act “governs payment for claims for health care providers—such as PHI—who provide services to workers’ compensation patients.” PHI Air has no contract with any workers’ compensation insurance carrier. Rather, under the Act, PHI Air submits invoices to insurance carriers directly as claims on insurance policies. To facilitate uniform payments, the Division has adopted reimbursement rates. If no guideline exists for a particular service, the insurance carrier must reimburse the provider the Division’s determination of a “fair and reasonable amount,” consistent with section 413.011 of the Texas Labor Code.35 Read separately and together, these provisions prescribe the benefits an insurance carrier must afford to a health-care-provider claimant, like PHI Air, which invokes the policy as a third-party beneficiary of the insurance contract.36

*17 The Workers’ Compensation Act thus is the foundation for every workers’ compensation insurance policy issued in Texas.37 Laws that “directly regulate the ‘business of insurance’ ” include those that “prescrib[e] the terms of the insurance contract.”38 Through its provisions, the Act prescribes payment terms under workers’ compensation policies, without reference to any separate contractual agreement. The reimbursement amount, and the formula for determining that amount, is part of every policy; it is the payment responsibility assumed by a private insurance company in the insurance contract. Unlike some other states, the Texas workers’ compensation system operates through private insurance companies—there is no Texas workers’ compensation without private insurance.39 The “actual performance of an insurance contract” includes paying benefits under the policy, which is “an essential part of the ‘business of insurance.’ ”40

Because Texas relies on private insurers, it is different from states in which a state fund pays out benefits. In EagleMed LLC v. Cox, the Tenth Circuit held that McCarran–Ferguson did not shield Wyoming’s workers’ compensation laws from preemption.41 But Wyoming has “an industrial-accident fund—financed by [the non-insurance] industry and underwritten by the state.”42 The Tenth Circuit found this distinguishing feature critical, observing that it was “not persuaded” that the Wyoming statute “regulate[d] the business of insurance simply because other states have structured their workers’ compensation programs to operate through private insurance companies.”43 The court did not view Wyoming’s state fund as one that spread policyholder risk, which the Supreme Court has held is an important feature of a law that regulates the “business of insurance.”44

In contrast, the Texas Workers’ Compensation Act specifies the coverage a private insurer must afford—and the payment of scheduled medical benefits—in exchange for the premium paid by employer-policyholders. The premium the insurance carrier charges participating employers is based on the coverage state law requires it to provide. If the coverage afforded under the policy increases, it follows that the premium charged to policyholders for that coverage will increase too.45 PHI Air insists that the Workers’ Compensation Act does not apply to it and, consequently, demands that it be paid more than the Division’s regulations allow. But if insurance carriers must pay PHI Air more than state law requires (i.e., if the coverage under the policy is expanded to require a higher reimbursement amount than the state’s mandated rate), then premiums must rise to reflect the change. Raising the premium is the way that the risk of increased claims cost is spread across all policyholders.

III

A

*18 The Supreme Court’s decisions in Group Life & Health v. Royal Drug Co. and Union Labor Life Insurance Co. v. Pireno do not support PHI Air’s argument that McCarran–Ferguson does nothing to shield the Texas Workers’ Compensation Act from federal encroachment.

In Royal Drug, the Supreme Court held that an insurer’s third-party contracts with pharmacies were not part of the business of insurance exempt from federal antitrust laws.46 The Court explained that those third-party agreements were ancillary to the promises made in insurance contracts because “policyholders are basically unconcerned with arrangements made between Blue Shield and participating pharmacies.”47 The Court observed that the pharmacy agreements were “legally indistinguishable from countless other business arrangements that may be made by insurance companies to keep their costs low and thereby also keep low the level of premiums charged to their policyholders.”48

Royal Drug involved third-party agreements. In this case, however, the challenged payment terms are dictated by state law and the insurance policy itself. No similar state regulatory scheme was at issue in Royal Drug—the relationship between the pharmacies and the insurance company was not state-mandated, nor did Royal Drug involve claims brought under an insurance policy. Unlike the pharmacies in Royal Drug, PHI Air has no ancillary agreement with a private insurer that it seeks to enforce. And here, of course, PHI Air seeks to charge insurance carriers more than the amount afforded under state law and their insurance policies.

Further, Royal Drug examines McCarran–Ferguson’s second clause, which exempts the “business of insurance” from antitrust regulation, not the first clause at issue in this case.49 The second clause is a “narrow[ ]” exemption from antitrust laws.50 In contrast, the first clause covers a “broad category of laws” that are “enacted ‘for the purpose of regulating the business of insurance.’ ”51 Recognizing this distinction, the Supreme Court later noted in Fabe, a first-clause case, that the first clause of McCarran–Ferguson’s section 2(b) is “not so narrowly circumscribed”:

The language of § 2(b) is unambiguous: The first clause commits laws “enacted ... for the purpose of regulating the business of insurance” to the States, while the second clause exempts only “the business of insurance” itself from the antitrust laws. To equate laws “enacted ... for the purpose of regulating the business of insurance” with the “business of insurance” itself ... would be to read words out of the statute.52

In Royal Drug, the Court explained that “[t]he Pharmacy Agreements are not ‘between insurer and insured.’ They are separate contractual arrangements between [the insurance carrier] and pharmacies engaged in the sale and distribution of goods and services other than insurance.”53 Here, in contrast, the contractual arrangements between the covered employee, subscribing employer, insurance carrier, and medical provider claiming benefits under the policy are not “separate.”

*19 Like Royal Drug, the Pireno case also concerned section 2(b)’s antitrust clause and its application to third-party agreements not governed by insurance policies. In Pireno, the Supreme Court considered whether an outside peer-review committee that advised an insurer about charges for chiropractic services was “exempt from antitrust scrutiny as part of the ‘business of insurance.’ ”54 The Court held that the insurer’s agreement with the peer-review service did not implicate the business of insurance because the peer-review process was “a matter of indifference to the policyholder, whose only concern is whether his claim is paid, not why it is paid.”55 In contrast, the payment provision that the air-ambulance service challenges here is a part of the insurance contract that is regulated by statute. There was no corresponding policy provision or state statute requiring peer review in Pireno. Instead, the insurers’ private agreements with third parties were at issue.

Later, in Fabe, the Supreme Court clarified its holdings in Pireno and Royal Drug, observing that the cases “held only that ‘ancillary activities’ that do not affect performance of the insurance contract or enforcement of contractual obligations do not enjoy the antitrust exemption for laws regulating the ‘business of insurance.’ ”56

B

Pireno, though not directly applicable to this case, outlined three “non-dispositive”57 conditions for deciding, in a second-clause case, whether a “practice” pertains to the “business of insurance.”58 Courts should consider whether:

(1) the practice has the effect of transferring or spreading a policyholder’s risk; (2) the practice is an integral part of the policy relationship between the insurer and the insured; and (3) the practice is limited to entities within the insurance industry.59

Applying these conditions to a state statute (not an insurance “practice”), does not change the result.60 As the Supreme Court later recognized in Fabe, a regulation directed toward the “performance” of an insurance contract satisfies the Pireno test.61 An insurance company’s payment to PHI Air is performance of a central policy obligation—the payment of medical benefits under the policy.

The Texas Workers’ Compensation Act’s reimbursement provisions dictate an insurers’ payment obligations for claims brought under the policy, thereby defining the medical losses that the insurer agrees to cover for its employer policyholders. The costs of these covered claims are spread over all policyholders through an insurance premium charged to employer policyholders (whether or not they have asserted a claim). Because the reimbursement provisions that PHI Air challenges define the scope of the coverage afforded for claims made under the policies, those provisions are integral to the policy relationship. And because the reimbursement provisions spread an individual policyholder’s risk associated with liability for an individual employee’s injury to all who participate in the system, they transfer a policyholder’s risk to the pool of policyholders. The insurance carriers cover that risk in the amount dictated by state law.62

*20 The challenged reimbursement regulations reach insurers, employer policyholders, employees, and those directly claiming statutory benefits under the policy of insurance (medical providers). The regulatory framework governs the various aspects of the intertwined relationships among those parties. The Act thus meets Pireno’s “non-dispositive” factors.

IV

Ultimately, the air-ambulance service provider in this case seeks the relatively secure direct payment of insurance policy benefits in lieu of attempting to collect from the users of its services in the private marketplace. As PHI Air concedes, it directly billed insurers under their insurance policies and seeks payment under the coverage afforded. By opportunistically relying on the Airline Deregulation Act, PHI Air seeks to benefit from federal preemption without the market forces of deregulation, and from direct payment for its services without the state regulations that constrain all others who seek payments under workers’ compensation policies. In other words, PHI Air charges and claims insurance benefits under the Workers’ Compensation Act like a health care provider, not like the air-taxi service that purportedly brings it within the Airline Deregulation Act.

It was this intrusion into state insurance regulation by unrelated federal laws that Congress stopped. Because the McCarran–Ferguson Act shields the Texas Workers’ Compensation Act’s insurance provisions from federal preemption, it is appropriate that we reverse and remand. I therefore respectfully concur.

Justice Green, joined by Chief Justice Hecht, dissenting.

This case requires us to determine whether the federal Airline Deregulation Act (ADA) preempts the Texas Workers’ Compensation Act’s (TWCA) reimbursement scheme as it relates to air-ambulance transport claims. The Court concludes that it does not because PHI Air Medical, LLC (PHI) cannot show that the challenged reimbursement scheme “relate[s] to a price, route, or service of an air carrier.” 49 U.S.C. § 41713(b)(1). Because I believe that a reimbursement scheme that regulates the amount an insurer must pay to reimburse an air carrier is such a law, I would conclude that the challenged scheme is preempted by the ADA. Additionally, I would conclude that the McCarran–Ferguson Act (MFA) does not save the reimbursement scheme because neither the TWCA nor its reimbursement scheme was “enacted ... for the purpose of regulating the business of insurance.” 15 U.S.C. § 1012(b). Therefore, I respectfully dissent.

I. Airline Deregulation Act

When Congress enacted the ADA, it included a broad preemption provision to prevent states from passing laws that would undo federal deregulation. Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383–84, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992). That express preemption clause states that the ADA preempts state “law[s] related to a price, route, or service of an air carrier.” 49 U.S.C. § 41713(b)(1). Thus, for the ADA to preempt the TWCA’s reimbursement scheme, that scheme must (1) “relate[ ] to a price, route, or service” (2) “of an air carrier.”1 Id.

The United States Supreme Court has frequently acknowledged the breadth of the ADA’s “related to” provision and unequivocally stated that it “is much more broadly worded” than comparable preemption provisions. Nw., Inc. v. Ginsberg, 572 U.S. 273, 283, 134 S.Ct. 1422, 188 L.Ed.2d 538 (2014); see Am. Airlines, Inc. v. Wolens, 513 U.S. 219, 229 n.5, 115 S.Ct. 817, 130 L.Ed.2d 715 (1995); Morales, 504 U.S. at 384–85, 112 S.Ct. 2031; see also Rowe v. N.H. Motor Transp. Ass’n, 552 U.S. 364, 370–71, 128 S.Ct. 989, 169 L.Ed.2d 933 (2008). The ADA preempts a state law if it “ha[s] a connection with, or reference to [air] carrier ‘[prices], routes, or services’ ”; if the state law affects a price, route, or service, even indirectly; or if the state law has a “significant impact” on Congress’s deregulatory or preemption-related objectives. Rowe, 552 U.S. at 370–71, 128 S.Ct. 989 (emphasis removed) (citations omitted). The ADA’s preemption provision is not limited to only those state laws that prescribe a price, route, or service. Morales, 504 U.S. at 385, 112 S.Ct. 2031 (noting that if the ADA only preempted state laws prescribing a price, then it would have stated it preempts state laws that “regulate” rather than “relate to” a price, route, or service of an air carrier). Rather, it includes those state laws that “encroach upon the area of exclusive federal concern.” See Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 525, 101 S.Ct. 1895, 68 L.Ed.2d 402 (1981). But the ADA will not preempt a state law if it is related in “ ‘too tenuous, remote, or peripheral a manner’ to have pre-emptive effect.” Morales, 504 U.S. at 390, 112 S.Ct. 2031 (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 100 n.21, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983)).

*21 The TWCA’s reimbursement scheme is related to an air ambulance’s prices because it indirectly limits the amount that an air carrier may charge for its services. Under the TWCA, when an air-ambulance transport renders a service that qualifies as a medical benefit under Texas workers’ compensation insurance, it must bill that amount to the insurer. TEX. LAB. CODE § 408.027(a). And the insurer is responsible for paying that claim. Id. § 408.027(b). Further, the payment must be “in accordance with the fee guidelines authorized under” the TWCA and its corresponding regulations. Id. § 408.027(f). Consistent with this authorization, the Labor Code and the Division of Workers’ Compensation (Division) have standardized the amount an insurance provider must pay for a transport from companies like PHI. Namely, the Labor Code identifies that the reimbursement amount “must be fair and reasonable” in a way that “ensure[s] the quality of medical care” and administers “medical cost control.” Id. § 413.011(d); see 28 TEX. ADMIN. CODE § 134.1(f). All parties agree that such a requirement means an insurer may not pay, either by its own determination or after review by the Division, an amount that exceeds a “fair and reasonable” rate. See TEX. LAB. CODE § 413.011(d); 28 TEX. ADMIN. CODE § 134.1(f).

Thus, rather than limit what price an air ambulance may charge the insurer, the reimbursement scheme refocuses its limitation on the amount the insurer must pay. In reality, there is no difference. It does not matter whether PHI cannot recoup the price of its services because it is limited in what it can charge or because the insurer is limited in what it must pay. Put differently, if state law required PHI to bill an insurance company a “fair and reasonable” rate, would that limit not relate to an air carrier’s price, even though it would directly limit what an air carrier may charge? I think it must. See Valley Med Flight, Inc. v. Dwelle, 171 F. Supp. 3d 930, 942 (D.N.D. 2016) (holding that the ADA preempted a North Dakota law limiting the amount that air-ambulance transports could bill to an amount consistent with the insurance provider’s fee schedule). Surely, then, “compelling or restricting” a specific payment relates to a price. Morales, 504 U.S. at 389, 112 S.Ct. 2031 (citing Ill. Corp. Travel, Inc. v. Am. Airlines, Inc., 889 F.2d 751, 754 (7th Cir. 1989)); Air Evac EMS, Inc. v. Sullivan, 331 F. Supp. 3d 650, 663 (W.D. Tex. 2018) (“Because the TWCA effectively determines what [an air-ambulance transport company] can charge by restricting the amount it can receive for its services, the [reimbursement scheme] relate[s] to [an air carrier]’s prices.”). Either statutory regime compels the same result, and both would be “designed” to relate to a price of an air carrier. See Morales, 504 U.S. at 386, 112 S.Ct. 2031 (quoting Ingersoll—Rand Co. v. McClendon, 498 U.S. 133, 139, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990)) (“[A] state law may ‘relate to’ a benefit plan, and thereby be pre-empted, even if the law is not specifically designed to affect such plans, or the effect is only indirect.”). And Congress, when it decided to deregulate air carrier prices, did so with the understanding that its deregulation would allow air carriers to set their own prices—not the state or those who pay air carriers consistent with state guidelines. See id. at 378, 112 S.Ct. 2031.

Other courts have held that state-law caps on insurer reimbursement for air-ambulance transports are preempted by the ADA because such laws establish a mandatory fixed maximum rate for reimbursement. See EagleMed LLC v. Cox, 868 F.3d 893, 902 (10th Cir. 2017). And the Court today relies on Cox to distinguish Texas’s reimbursement scheme. The Court concludes that because the TWCA’s reimbursement scheme is a generally applicable law that does not expressly state what an insurer must pay an air-ambulance provider, then it is preempted only if it has a forbidden significant effect on PHI’s prices. Ante at ––––. The Court goes on to hold that, because the fair and reasonable amount required by the TWCA could be consistent with PHI’s billed price, the reimbursement scheme does not relate to PHI’s prices as a matter of law given that it does not always have that forbidden effect. Ante at ––––. Yet the Supreme Court has stated that the ADA preempts even those state laws “ ‘consistent’ ... with federal regulation.” Rowe, 552 U.S. at 370, 128 S.Ct. 989 (citing Morales, 504 U.S. at 386–87, 112 S.Ct. 2031). Thus, evidence that a state regulation could result in the same price that an air carrier would set itself as a result of deregulation does not mean that law does not “relate[ ] to” “a price” of an air carrier. 49 U.S.C. § 41713(b)(1). And the record reflects that the reimbursement scheme does relate to PHI’s prices.

*22 After the insurers paid PHI based on the reimbursement scheme, PHI sought a medical fee dispute resolution before the Division, which ultimately concluded that reimbursement should be “fair and reasonable,” amounting to 125 percent of Medicare service rates. The administrative law judge determined on appeal that the “fair and reasonable” rate was 149 percent of Medicare service rates. PHI asserted, in defense of its claim that insurers should pay the price that they are billed, that the ADA preempts the TWCA. See Scarlett v. Air Methods Corp., 922 F.3d 1053, 1061 (10th Cir. 2019) (concluding that the ADA could be used defensively to entitle an air-ambulance provider to its billed charge). The administrative law judge then ordered the insurers to pay an amount consistent with this newly determined “fair and reasonable” amount. Under both approaches—125 or 149 percent—the amount owed was less than the amount PHI charged. After the adjustment, the requisite payment for each transport would be between $9,989 and $28,000 less than the price charged to the insurer. This underpayment “surely ‘relates to’ price.” See Morales, 504 U.S. at 389, 112 S.Ct. 2031 (citing Ill. Corp. Travel, 889 F.2d at 754).

The fact that the court in Cox struck both the balance-billing prohibition and the limit on insurer reimbursement is telling. 868 F.3d at 901. If the Court is correct in its suggestion today that PHI is the victim of its own pleading, ante at ––––, and the TWCA is not preempted because the balance-billing prohibition was only challenged in the alternative, then why is it that Cox specifically concluded that limiting the amount that an insurer can reimburse is related to price? 868 F.3d at 901. In other words, if balance billing is truly what relates to price here, then why was a scheme that capped reimbursement at a fixed amount relevant to whether that cap relates to price? I see no distinction.

The TWCA’s reimbursement scheme plainly sets a maximum amount for which PHI can be compensated by the insurer, which PHI is statutorily required to bill for its services. See TEX. LAB. CODE § 408.027(a)–(b). That maximum amount is a fair and reasonable price as determined by the insurer or the Division. See id. § 413.011(d); 28 TEX. ADMIN. CODE § 134.1(f). At best, this is the price that these parties believe the market would set, rather than the amount that the market actually sets. See Morales, 504 U.S. at 378, 112 S.Ct. 2031; see also EagleMed, LLC v. Travelers Ins., 56 Kan.App.2d 79, 424 P.3d 532, 539 (2018) (concluding that the ADA preempts “a price sanctioned by the State rather than one determined by market forces as Congress intended”). The scheme thus clearly relates to PHI’s prices because it controls the amount that PHI is entitled to collect from the insurer, the party from whom the TWCA prescribes reimbursement of medical benefits. See TEX. LAB. CODE § 408.027(a)–(b).

In Sabre Travel International, Ltd. v. Deutsche Lufthansa AG, 567 S.W.3d 725 (Tex. 2019), we concluded that a tortious interference claim was “too tenuous, remote, or peripheral” to an air carrier’s prices to be preempted by the ADA. Id. at 738. The tortious interference claim arose from a booking company’s conduct that occurred after an airline ticket was purchased and independently of determining the price of a ticket. Id. We explained that the passive booking costs imposed on an airline company by a third-party booking agent went to airline cost alone, and not price. Id. at 737–38. Sabre could not demonstrate that those third-party costs were anything more than costs, and thus those costs were “too tenuous, remote, or peripheral” to the airline’s prices for purposes of preemption. Id. at 738. Here, PHI has shown that the TWCA’s reimbursement scheme goes directly to price, as the scheme determines the amount that insurers will reimburse air-ambulance providers for their services. And the record indicates that application of that reimbursement scheme to PHI has a clear effect on what it collects from the insurers responsible for payment of medical benefits.

The Supreme Court has said that the ADA “stops States from imposing their own substantive standards with respect to [prices], routes, or services, but not from affording relief to a party who claims and proves that an airline dishonored a term the airline itself stipulated.” Wolens, 513 U.S. at 232–33, 115 S.Ct. 817. That is why state laws that relate to price, and not breach-of-contract claims that relate to price, are preempted by the ADA. When breach-of-contract claims are at issue, air carriers have electively set their own terms. Id. “[T]he ADA’s overarching deregulatory purpose ... mean[s] ‘States may not seek to impose their own public policies or theories of competition or regulation on the operations of an air carrier.’ ” Id. at 229 n.5, 115 S.Ct. 817 (citation omitted). The TWCA does just that. It imposes standards that regulate the amount an air carrier like PHI may collect from those required to pay medical benefits, effectively limiting what it may charge. For these reasons, I would hold that the TWCA’s reimbursement scheme “relate[s] to a price ... of an air carrier.” 49 U.S.C. § 41713(b)(1).

II. McCarran–Ferguson Act

*23 Although I would conclude that the ADA preempts the TWCA’s reimbursement scheme, the scheme can nevertheless be saved by the MFA’s “reverse preemption” provision if the TWCA in general, or its reimbursement scheme in particular, qualifies as a law enacted for the purpose of regulating the business of insurance. 15 U.S.C. § 1012(b). Because the TWCA and its origins show that the Legislature enacted the TWCA as a tort reform measure, and the United States Supreme Court has prescribed a particular meaning to the term “business of insurance,” I would conclude that the statute, both as a whole and with respect to the challenged reimbursement scheme, was not enacted for the purpose of regulating the business of insurance.2

A. Purpose, Structure, and Effect of the TWCA

Analyzing whether the MFA reverse preempts a state statute requires a two-tiered approach. First, we “consider[ ] the overall purposes, structural framework, and effect of the entire state law” in determining whether the MFA saves the reimbursement scheme from preemption. Fredericksburg Care Co. v. Perez, 461 S.W.3d 513, 521 (Tex. 2015). If the law in its entirety was not enacted for the purpose of regulating the business of insurance, then we proceed to determine whether the specifically challenged provisions fall within the ambit of the MFA. Id. at 525. Guiding this analysis, though, is the language of the MFA itself. Although we analyze the statute holistically and then particularly, we must be mindful that the MFA is about “the relationship between the insurance company and its policyholders.” Fabe, 508 U.S. at 501, 113 S.Ct. 2202. State laws may come within the scope of the MFA if they control “the type of policy which could be issued, its reliability, interpretation, and enforcement.” SEC v. Nat’l Sec., Inc., 393 U.S. 453, 460, 89 S.Ct. 564, 21 L.Ed.2d 668 (1969). Regardless of these considerations, our focus should be on whether the statute is “aimed at protecting or regulating [the insurer–policyholder] relationship, directly or indirectly.” Id. Thus, I begin with whether the TWCA was enacted to regulate the insurer–policyholder relationship.

The concurrence relies on the fact that the TWCA allows the Texas Department of Insurance to “administer and operate the workers’ compensation system” and directs the Department to approve those policies administered in Texas to conclude that the TWCA falls within the scope of the MFA. Ante at ––––; see TEX. LAB. CODE § 402.001; Fairfield Ins. Co. v. Stephens Martin Paving, LP, 246 S.W.3d 653, 658 (Tex. 2008). This approach, though, conflates mechanisms with purpose. We have previously recognized that while the TWCA may offer employees relief as insurance beneficiaries and employers coverage as policyholders, the TWCA exists to assist both the employee and employer with job-related injuries:

*24 The purpose of the Act is to provide employees with certainty that their medical bills and lost wages will be covered if they are injured. An employee benefits from workers’ compensation insurance because it saves the time and litigation expense inherent in proving fault in a common law tort claim. But a subscribing employer also receives a benefit because it is then entitled to assert the statutory exclusive remedy defense against the tort claims of its employees for job related injuries.

Tex. Mut. Ins. Co. v. Ruttiger, 381 S.W.3d 430, 441 (Tex. 2012) (quoting HCBeck, Ltd. v. Rice, 284 S.W.3d 349, 350 (Tex. 2009)); see Tex. Workers’ Comp. Comm’n v. Garcia, 893 S.W.2d 504, 511 (Tex. 1995). As the Division recognizes, the TWCA offers an alternative to the common law, under which “injured workers were [often] denied recovery.” Garcia, 893 S.W.2d at 510 (citation omitted). This was in response to harsh complete defenses employers could invoke to limit or avoid liability. Id. The original act eliminated these complete defenses in exchange for a prohibition on an injured employee’s ability to bring a claim against a subscribing employer in a variety of circumstances. See Act of Mar. 29, 1913, 33d Leg., R.S., ch. 179, §§ 1, 3, 1913 Tex. Gen. Laws 429, 429–30. At the heart of this exchange was the employer–employee relationship and the resolution of job-related injuries. In this way, the purpose of the original act was to ensure the injured employee’s entitlement to certain benefits while maintaining an employer’s limited liability.3 Id. §§ 3, 6–16, 1913 Tex. Gen. Laws 429, 430–32; see Garcia, 893 S.W.2d at 510–11. We have explained:

The Employers’ Liability Act of 1913 replaced the common law negligence remedy with limited but more certain benefits for injured workers. Acts of 1913, 33d Leg., ch. 179. The Texas act, which was part of a nationwide compensation movement, was perceived to be in the best interests of both employers and employees.... Employees injured in the course and scope of employment could recover compensation without proving fault by the employer and without regard to their or their coworkers’ negligence. Acts of 1913, ch. 179, pt. I, §§ 7–12. In exchange, the employer’s total liability for an injury was substantially limited. Id. § 3. Although employers were allowed to opt out of the system, the act discouraged this choice by abolishing all the traditional common law defenses for non-subscribers. Id. § 1.

Garcia, 893 S.W.2d at 510–11 (footnote omitted).

Because the original workers’ compensation act proved unsatisfactory for a variety of reasons, the Legislature adopted a revised TWCA that attempted to restore the tradeoff contemplated under the original version. Id. at 511–12; see TEX. LAB. CODE § 408.001(a); see also TEX. LAB. CODE § 402.021(d). It did so without modifying its intent. Even after the amendments, the TWCA continues to protect both the injured worker and the employer by ensuring recovery for on-the-job injuries without regard to the employee’s own negligence, while limiting the employer’s liability. See Ruttiger, 381 S.W.3d at 441; In re Poly-Am., L.P., 262 S.W.3d 337, 350 (Tex. 2008). That the Legislature offers the employee relief through private insurance does not transform the entire TWCA into a law enacted for the purpose of regulating the business of insurance. See Fabe, 508 U.S. at 502–03, 508–09, 113 S.Ct. 2202 (concluding that though a portion of a statute was enacted for the purpose of regulating the business of insurance, the entire statute was not). To conclude otherwise would require that we ignore the history and origins of the TWCA itself. See Waak v. Rodriguez, ––– S.W.3d ––––, ––––, 2020 WL 3126985 (Tex. 2020).

*25 The structure of the TWCA demonstrates that its purpose is to provide a policy tradeoff between the employer and employee with respect to on-the-job injury claims. See Tex. W. Oaks Hosp., LP v. Williams, 371 S.W.3d 171, 186 (Tex. 2012). The concurrence asserts that the TWCA is administered through private insurers and thus cannot be accomplished without private insurance contracts. Ante at ––––. While that is true for subscribing employers, the concurrence fails to recognize that workers’ compensation insurance is but one remedy the Legislature envisioned to improve an employee’s recovery for on-the-job injuries and an employer’s protection in that process. See TEX. LAB. CODE § 406.033(a) (removing common law defenses in workers’ compensation claims for non-subscribing employers). When the structure of the TWCA is examined, its purpose to offer employee and employers alike a remedy for on-the-job injuries becomes visible.4

First, the TWCA incentivizes employers to opt in. See id. It encourages, but does not require, an employer to elect into its provisions. See id. § 406.002(a) (“Except for public employers and as otherwise provided by law, an employer may elect to obtain workers’ compensation insurance coverage.”) (emphasis added). If an employer elects to participate in the workers’ compensation system, and the employer’s employee does not opt out, then “employees are generally precluded from filing suit against [the employer] and must instead pursue their claims through an administrative agency against the employer’s insurance carrier for benefits provided for in the TWCA.” Tex. W. Oaks Hosp., 371 S.W.3d at 186; see TEX. LAB. CODE § 406.031(a) (directing that the insurance carrier be liable for compensation arising out of an employee’s on-the-job injury when the employer elects to participate in the workers’ compensation system). If, however, “an employer forgoes workers’ compensation coverage ... it is subject to suits at common law for damages.” Tex. W. Oaks Hosp., 371 S.W.3d at 187. The employer that forgoes coverage may not assert as a defense in such a suit that “(1) the employee was guilty of contributory negligence; (2) the employee assumed the risk of injury or death; or (3) the injury or death was caused by the negligence of a fellow employee.” TEX. LAB. CODE § 406.033(a). To be successful in her suit, the employee need only show that her injury was caused by a negligent employer or its agent acting within the course and scope of its agency. Id. § 406.033(d).

*26 Second, the Legislature structured the TWCA to discourage employees from opting out of their employer’s elective participation in the workers’ compensation system. See Tex. W. Oaks Hosp., 371 S.W.3d at 186–87. The benefits offered to the employee who remains in the system include medical benefits, temporary income benefits, impairment income benefits, supplemental income benefits, and lifetime benefits. TEX. LAB. CODE §§ 408.021–.162. The insurance carrier is required by statute to initiate claims within fifteen days of receiving timely notice of the claim, ensuring prompt resolution. Id. § 409.021(a). And if a carrier refuses a claim for a groundless reason, it is subject to administrative penalties. Id. § 409.022(c). Further, the insurance carrier is required to compensate the injury “without regard to fault or negligence” of the employee or employer. Id. § 406.031(a); see Tex. W. Oaks Hosp., 371 S.W.3d at 186 (“But employees need not prove the employer’s negligence for workers’ compensation recovery....”). While the TWCA allows employees to opt out of their employer’s participation in coverage, TEX. LAB. CODE § 406.034(a)–(b), the employer then retains all common law defenses in a suit brought by that employee, including the employee’s own negligence. Id. § 406.034(d). For such an employee, compensation occurs once litigation is complete or settlement is reached.

Thus, the workers’ compensation construct contemplates two systems, one in which covered employees may recover relatively quickly and without litigation from subscribing employers and the other in which non[-]subscribing employers, or the employers of employees who have opted not to accept workers’ compensation coverage, are subject to suit by injured employees to recover for their on-the-job injuries.

Tex. W. Oaks Hosp., 371 S.W.3d at 187.

The United States Supreme Court has consistently stated that first-clause MFA cases,5 like the one before us, apply to state statutes whose purpose is to regulate the relationship between insurer and policyholder. Fabe, 508 U.S. at 501, 113 S.Ct. 2202 (citing Nat’l Sec., 393 U.S. at 460, 89 S.Ct. 564). Rather than regulating the relationship between insurer and policyholder, the structure of the TWCA supports a conclusion that its purpose is to regulate the relationship between employer and employee. Unlike Fabe, in which the Supreme Court noted that the state “priority statute was enacted as part of a complex and specialized administrative structure for the regulation of insurance companies from inception to dissolution,” id. at 494, 113 S.Ct. 2202, the TWCA creates a system that manages on-the-job injury claims between employee and employer.

Although the workers’ compensation system is administered by private insurance providers, resulting in private insurance contracts, that does not obviate the fact that its purpose and structure is to manage on-the-job injury disputes between employer and employee. See 15 U.S.C. § 1012(b); Cox, 868 F.3d at 904 (concluding that even if Wyoming’s workers’ compensation statute were similar to Texas’s privatized approach, the MFA would not apply because neither is directed at the business of insurance). Thus, the effect of the TWCA’s compensation system “is to empower the” employee and employer to participate in the TWCA, not for insurance carriers to provide insurance—although that may also be a collateral consequence of the system. See Fabe, 508 U.S. at 494, 113 S.Ct. 2202.

In Fredericksburg Care Co., we rejected the beneficiaries’ request to look past the purpose and structure of the Texas Medical Liability Act to conclude that its potential lowering of insurance premiums meant that it was enacted for the purpose of regulating the business of insurance. 461 S.W.3d at 524. Similarly, here, the fact that the system includes the issuance of insurance contracts does not alter the purpose and structure of the TWCA, which facilitates resolution of on-the-job injury issues between employers and employees.

B. Application of the TWCA’s Reimbursement Scheme

*27 Although the TWCA as a whole was not enacted “for the purpose of regulating the business of insurance,” its reimbursement scheme may still fall within the scope of the MFA. 15 U.S.C. § 1012(b); see Fabe, 508 U.S. at 505, 113 S.Ct. 2202; Fredericksburg Care Co., 461 S.W.3d at 525. The approach to whether the MFA applies nevertheless remains the same and focuses on whether the challenged provision addresses “the relationship between the insurance company and the policyholder.” Fabe, 508 U.S. at 501, 113 S.Ct. 2202 (quoting Nat’l Sec., 393 U.S. at 460, 89 S.Ct. 564); see Fredericksburg Care Co., 461 S.W.3d at 526–27 (citations omitted) (“Much like the rest of Chapter 74, section 74.451 has little to do with the ‘relationship between the insurance company and its policyholders.’ ”).

The concurrence concludes that the parties here have a stronger case that the TWCA and its challenged provisions regulate the business of insurance than the parties in Fabe. Ante at ––––. In Fabe, pursuant to a state statute, the Ohio Superintendent of Insurance ordered that the United States, as an obligee, receive fifth priority in an insurance company’s liquidation. 508 U.S. at 494–95, 113 S.Ct. 2202. This would place the United States, which under federal law would normally receive first priority in liquidation, see 31 U.S.C. § 3713(a)(1)(A)(iii), behind a variety of creditors, including insurance “policyholders’ claims” and “claims of general creditors.” Fabe, 508 U.S. at 495, 113 S.Ct. 2202. The Supreme Court noted that while the Ohio priority statute fell short of “prescribing the terms of the insurance contract or ... setting the rate charged by the insurance company,” the statute nevertheless regulated the business of insurance because giving priority to a policyholder amounted to “the actual performance of an insurance contract.” Id. at 502–03, 113 S.Ct. 2202. The Court distinguished Pireno, a second-clause case, by reasoning that the Ohio law determined whether a policy was performed, while Pireno dealt with why a policy was performed. Id. at 503, 113 S.Ct. 2202 (citing Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 132, 102 S.Ct. 3002, 73 L.Ed.2d 647 (1982)).

The reimbursement scheme at issue here affects the amount an insurance company must pay a service provider, not whether the policyholder’s contract is performed. See Pireno, 458 U.S. at 132, 102 S.Ct. 3002 (holding that a state law did not regulate the business of insurance when it established a process that was “a matter of indifference to the policyholder, whose only concern is whether his claim is paid, not why it is paid”). Under the TWCA, the benefit conferred to a policyholder and beneficiary is that neither will be liable for services that fall within the policy’s scope of coverage. TEX. LAB. CODE § 408.021. And the insurance company assumes the payment obligation for those covered services, including the medical benefit. Id. §§ 401.011(31), 408.021. After the insurance company has concluded that an air-ambulance transport falls within the scope of the medical benefit, and the insured has received the benefit promised to it under the policy, the reimbursement scheme then determines the amount that the insurance company owes the medical service provider. Thus, the reimbursement scheme does not operate to determine whether a claim is covered; it operates to determine the amount owed to the service provider. See Fabe, 508 U.S. at 503–04, 113 S.Ct. 2202; Pireno, 458 U.S. at 132, 102 S.Ct. 3002. Indeed, the benefit conferred to the policyholder is not the amount an insurance company will pay for the claim, but rather that the insurance company will pay for medical benefits arising under the policy. See Sullivan, 331 F. Supp. 3d at 666–67 (“[The TWCA’s] policy benefit conferred is the movement of the obligation to pay an air ambulance provider from the insureds to the insurer....”). The employer and injured employee, unlike the policyholders in Fabe, need not rely on the challenged reimbursement scheme to receive benefits under the workers’ compensation system. See 508 U.S. at 503–04, 113 S.Ct. 2202.

*28 The Tenth Circuit in Cox reached the same conclusion in interpreting Wyoming laws that regulated reimbursement for air-ambulance transports under Wyoming’s workers’ compensation system. 868 F.3d at 897, 904–05. The Wyoming law allowed reimbursement at “a reasonable charge ... not in excess of the rate schedule established by the director,” id. at 898, similar to the Texas reimbursement scheme. See TEX. LAB. CODE § 413.011; 28 TEX. ADMIN. CODE §§ 134.1(a), (e)–(f), .203. The court held that the Wyoming law fell outside the scope of the MFA’s first clause not because of how Wyoming structured its law—that is, through a state fund rather than private insurance—but because the fee schedule was unrelated to the insurer–policyholder relationship. Cox, 868 F.3d at 904–05 (citing St. Bernard Hosp. v. Hosp. Serv. Ass’n of New Orleans, Inc., 618 F.2d 1140, 1145 (5th Cir. 1980)) (“[E]ven if we were to accept the argument that Wyoming’s state-run workers’ compensation system establishes a type of insurance, we are not persuaded that [the reimbursement scheme] are laws ‘regulating the business of insurance.’ ”). The reimbursement scheme here, too, exists separate and apart from the insurer–policyholder relationship because it relates to the payment of a service and not the scope of coverage.6

The concurrence is correct that the first clause of the MFA is broader than the second clause, but the meaning of “business of insurance” is the same in both. See Fabe, 508 U.S. at 504–05, 113 S.Ct. 2202 (focusing on the meaning of “laws ‘enacted ... for the purpose of regulating’ ” to conclude that the first clause is more expansive than the second clause). That is, if a state law does not involve “the business of insurance,” then it was not “enacted ... for the purpose of regulating the business of insurance.” 15 U.S.C. § 1012(b); see Fabe, 508 U.S. at 504–05, 113 S.Ct. 2202. And in Group Life & Health Insurance Co. v. Royal Drug Co., a second-clause case, the Supreme Court addressed the meaning of business of insurance in the context of payment arrangements between insurers and third-party service providers. 440 U.S. at 213, 99 S.Ct. 1067. There, the Supreme Court concluded that the “business of insurance” did not extend to pharmacy arrangements that existed to “minimize the costs” of the insurer but provided no benefit to the insurer other than that its costs would be fixed. Id. at 213–14, 99 S.Ct. 1067; see Genord v. Blue Cross & Blue Shield of Mich., 440 F.3d 802, 804–07 (6th Cir. 2006) (concluding that reimbursement arrangements mandated by law are not laws enacted for the purpose of regulating the business of insurance). Similarly, here, the reimbursement scheme exists to “minimize the costs” of the workers’ compensation insurance carrier. Royal Drug, 440 U.S. at 213, 99 S.Ct. 1067; see TEX. LAB. CODE § 413.011; 28 TEX. ADMIN. CODE §§ 134.1(a), (e)–(f), .203. In this context, the promise made to an employer is that “[the] insurance carrier is liable for compensation for an employee’s injury.” TEX. LAB. CODE § 406.031(a). The employer is indifferent to the reimbursement formula that affects the insurer and a third-party service provider. See Royal Drug, 440 U.S. at 214, 99 S.Ct. 1067 (footnote omitted) (“So long as [the policyholder’s prescription cost is fixed], policyholders are basically unconcerned with arrangements made between [the insurer] and participating pharmacies.”).

*29 And even if a reimbursement arrangement is mandated by law, that does not mean the MFA protects that arrangement. Genord, 440 F.3d 802. Relying on Royal Drug, the Sixth Circuit in Genord held that a Michigan law obligating health care corporations to enter into reimbursement arrangements with various medical service providers was not a law enacted for the purpose of regulating the business of insurance. Id. at 803, 808. The Michigan law, like the law at issue here, mandated terms of the reimbursement arrangement. Id. at 803–04; see TEX. LAB. CODE § 413.011; 28 TEX. ADMIN. CODE §§ 134.1(a), (e)–(f), .203. Although the law allowed an insurance provider to enter into its own arrangements with medical service providers in limited instances, the law required that—similar to the Texas reimbursement scheme—the service provider “accept payment at the regulated rate.” Genord, 440 F.3d at 804 (citation omitted); see TEX. LAB. CODE § 413.011; 28 TEX. ADMIN. CODE §§ 134.1(a), (e)–(f), .203. Because the reimbursement law did not relate to the coverage of claims for policyholders, but instead to what was owed to service providers, it was not an integral part of the insurance relationship. Genord, 440 F.3d at 808 (citing Royal Drug, 440 U.S. at 214, 99 S.Ct. 1067). Similarly, the TWCA’s reimbursement scheme is not integral to the insurance relationship because the policyholders are unaffected and unconcerned with insurers’ reimbursement to service providers under the scheme. See id. Instead, the prescribed amount that an insurance carrier must pay a third party is not an insurance benefit, but rather an attempt to control the insurer’s costs. Thus, these provisions are not “aimed at protecting or regulating” the performance of an insurance contract, Nat’l Sec., 393 U.S. at 460, 89 S.Ct. 564, but rather “the business of insurers.” Royal Drug, 440 U.S. at 211, 99 S.Ct. 1067.

Finally, applying the non-dispositive Pireno factors produces the same conclusion that the reimbursement scheme is not part of the “business of insurance.” See Pireno, 458 U.S. at 129, 102 S.Ct. 3002. Pireno identified three non-dispositive criteria for evaluating whether a practice is part of the “business of insurance,” including whether: “(1) the practice has the effect of transferring or spreading a policyholder’s risk; (2) the practice is an integral part of the policy relationship between the insurer and the insured; and (3) the practice is limited to entities within the insurance industry.” Fredericksburg Care Co., 461 S.W.3d at 521 (citations omitted). Having already addressed how the provisions relate to the insured–insurer relationship, I turn to the first and third factors.

First, the TWCA’s reimbursement scheme does not spread or transfer policyholders’ risk. Royal Drug held that risk sharing occurs when the insurer spreads the risk it assumes in offering a policy to a single policyholder by offering policies to other policyholders.7 440 U.S. at 211 & n.7, 99 S.Ct. 1067. Risk reduction through a reimbursement arrangement or scheme is not risk sharing because the reduction affects only the insurer’s liability under a given policy. Id. at 211, 99 S.Ct. 1067 n.7. Even if third-party cost constraints may “inure ultimately to the benefit of policyholders,” those constraints are still not the business of insurance. Id. at 214, 99 S.Ct. 1067. At most, the reimbursement scheme is simply that: a cost constraint that inures some benefit to an employer. The limits merely represent what an insurer must pay to satisfy its obligations to a service provider. The insurer assumes the responsibility to pay under the policy with the insured—risk shares—and the reimbursement scheme operates as a constraint on the insurer’s costs separate and apart from the agreement with the insured. See id.; Pireno, 458 U.S. at 130–31, 102 S.Ct. 3002.

*30 Second, payments to air-ambulance transports are not to entities within the insurance industry. The Supreme Court held in Pireno that a New York law allowing health insurers to use a peer-review system to determine the necessity and use of chiropractic treatments did not regulate the business of insurance. 458 U.S. at 134, 102 S.Ct. 3002. In discussing the third Pireno factor, the Supreme Court noted that the system “inevitably involve[d] third parties wholly outside the insurance industry—namely, practicing chiropractors.” Id. at 132, 102 S.Ct. 3002. The business of insurance excludes “[a]rrangements between insurance companies and parties outside the insurance industry.” Id. at 133, 102 S.Ct. 3002. Much like the chiropractors in Pireno, air-ambulance transports offer a service that might satisfy a benefit under an insurance policy. See id. at 122–23, 102 S.Ct. 3002. However, also like Pireno, that does not render limits on what an insurer may pay an air-ambulance transport “the business of insurance.” See id. at 132–33, 102 S.Ct. 3002. The scheme is akin to an agreement between insurance companies and those outside the industry because the scheme represents the amount that an insurance company must pay to a third party to satisfy the insurer’s obligations under a policy. See id. at 133, 102 S.Ct. 3002; Genord, 440 F.3d at 808–09; Air Evac EMS, Inc., 331 F. Supp. 3d at 666. The reimbursement scheme’s cost limits are directed not at insurers but rather at service providers. That is, the reimbursement scheme is directed at air-ambulance markets and does not represent “ ‘intra-industry cooperation’ in the underwriting of risks.” Pireno, 458 U.S. at 133, 102 S.Ct. 3002 (citations omitted); see Genord, 440 F.3d at 808 (doctors providing gynecological services are not within the insurance industry). Therefore, under Pireno, the TWCA’s reimbursement scheme is not aimed at protecting or regulating the performance of an insurance contract and does not regulate the business of insurance.

III. Conclusion

I cannot join the Court in concluding that the TWCA’s reimbursement scheme avoids or is saved from preemption. The reimbursement scheme relates to a price of an air carrier, and is thus preempted by the ADA, because it limits the amount that an air carrier may charge for its services. Further, the MFA does not reverse preempt the TWCA or its reimbursement scheme because neither was enacted for the purpose of regulating the business of insurance, as understood by the United States Supreme Court. The TWCA was enacted to manage on-the-job injury claims by encouraging participation in the workers’ compensation system and discouraging parties from resorting to litigation. Further, the reimbursement scheme regulates the relationship between the insurer and third-party service providers rather than the “business of insurance.” Because I would affirm the court of appeals’ judgment, I respectfully dissent.

Footnotes

1

PHI cites heavy discounts required for Medicare and Medicaid patients.

2

Section 413.011(d) provides:

Fee guidelines must be fair and reasonable and designed to ensure the quality of medical care and to achieve effective medical cost control. The guidelines may not provide for payment of a fee in excess of the fee charged for similar treatment of an injured individual of an equivalent standard of living and paid by that individual or by someone acting on that individual’s behalf. The commissioner shall consider the increased security of payment afforded by this subtitle in establishing the fee guidelines.

3

An insurer is not required to reimburse the provider more than the prescribed “maximum allowable rate,” defined as “the maximum amount payable to a health care provider [without] a contractual fee arrangement that is consistent with” Labor Code section 413.011 and Division rules. 28 Admin. Code § 134.1(a). If payment is determined under the fair and reasonable standard, that rate is deemed the maximum allowable rate. See id. § 134.203(d)(3), (f).

4

PHI has one contract for an agreed-upon price for intrastate transports with the University of Texas Medical Branch at Galveston. According to PHI, this contract covers less than 1% of PHI’s annual transports, and the Branch is not a party to this dispute.

5

The insurers contended that subsection (d)(1) of this rule established 125% of the Medicare rate as the maximum allowable reimbursement for air ambulances because a Medicare fee schedule exists for air ambulances.

6

Though the parties disputed rule 134.203’s applicability to air ambulance providers, the ALJ did not decide whether that rule applied because the fair and reasonable standard would determine reimbursement either way. Assuming arguendo that rule 134.203 did apply, the ALJ concluded that contrary to the insurers’ assertions, subsection (d)(1) would not set reimbursement at 125% of the Medicare rate for air ambulance services. Subsection (d)(1) provides that the maximum allowable reimbursement rate for certain services shall be 125% of the fee prescribed in the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies fee schedule. 28 Admin. Code § 134.203(d)(1). Because air ambulance fees are not addressed in that fee schedule, the ALJ concluded subsection (d)(1) would not apply to PHI. As subsection (d)(2) likewise would not apply because there is no Texas Medicaid fee schedule for air ambulance services, reimbursement would be decided according to the fair and reasonable reimbursement standard per subsection (d)(3). The same result would be true if rule 134.203 did not apply at all: rule 134.1 provides that reimbursement “in the absence of an applicable fee guideline or a negotiated contract” shall be determined by “a fair and reasonable reimbursement amount.” 28 Admin. Code § 134.1(e)(3).

7

See also N.Y. Cent. R.R. v. White, 243 U.S. 188, 206, 37 S.Ct. 247, 61 L.Ed. 667 (1917); Lykes Bros. S.S. Co. v. Esteves, 89 F.2d 528, 530 (5th Cir. 1937) (“[T]he state in the exercise of its police power may impose absolute liability upon the employer [for worker injuries] regardless of the existence of actionable negligence.”).

8

In the trial court, PHI sought a declaration in the alternative that the balance-billing prohibition is preempted. The trial court granted summary judgment against PHI on preemption. On appeal, PHI ultimately told the court of appeals it was challenging the balance-billing prohibition only in the alternative. The court of appeals did not reach that challenge, holding instead that the reimbursement standard is preempted. See 549 S.W.3d at 816 (“We limit our decision to the rules and statutes related to reimbursement rates and explicitly do not address the balance-billing provision, as PHI has explained that it only attacks that provision in the alternative and that it would prefer to leave the balance-billing prohibition intact.”).

9

The ADA did not displace preexisting federal Medicare and Medicaid regulations that set air ambulance reimbursement rates and prohibit balance billing. See Keefe ex rel. Keefe v. Shalala, 71 F.3d 1060, 1062–63 (2d Cir. 1995).

10

See, e.g., 1 Admin. Code §§ 355.101(c), .8600(c)(1).

11

Our dissenting colleagues suggest that Rowe broadens the ADA preemption test to displace any state provisions that relate to an air carrier’s price by “indirectly limit[ing] the amount that [it] may charge for its services.” Post at –––– (Green, J., dissenting). But Rowe reaffirms that the ADA does not preempt general state regulation unless it has “a ‘significant impact’ on carrier rates, routes, or services.” 552 U.S. at 375, 128 S.Ct. 989 (quoting Morales, 504 U.S. at 388, 112 S.Ct. 2031).

12

The parties dispute whether the presumption against preemption also comes into play in this express preemption case. We need not reach that dispute because we conclude that the text of the ADA’s express preemption clause as construed by the U.S. Supreme Court does not preempt Texas’s general fair and reasonable standard for reimbursement.

13

E.g., Fare, MERRIAM–WEBSTER, https://www.merriam-webster.com/dictionary/fare (last visited June 22, 2020) (“[T]he price charged to transport a person.”); Price, BLACK’S LAW DICTIONARY (11th ed. 2019) (“The amount of money or other consideration asked for or given in exchange for something else; the cost at which something is bought or sold.”); Rate, BLACK’S LAW DICTIONARY (11th ed. 2019) (“An amount paid or charged for a good or service.”); see also Rate, MERRIAM–WEBSTER, https://www.merriam-webster.com/dictionary/rate (last visited June 22, 2020) (“[A] charge, payment, or price fixed according to a ratio, scale, or standard....”); Price, OXFORD DICTIONARY OF ENGLISH (2017) (“[T]he amount of money expected, required, or given in payment for something.”).

14

E.g., Fare, MERRIAM–WEBSTER, https://www.merriam-webster.com/dictionary/fare (last visited June 22, 2020) (“[T]he price charged to transport a person.”); Price, AMERICAN HERITAGE DICTIONARY (5th ed. 2020) (“The amount of money or goods, asked for or given in exchange for something else.”).

15

TEX. GOV’T CODE § 81.011(a).

16

STATE BAR OF TEXAS, BOARD OF DIRECTORS POLICY MANUAL § 7.03.08(A), (B), (C)(4) (Jan. 2020).

17

Although the reimbursement goes to the airline customer in the State Bar example rather than directly to the air carrier as here, the economic effect is the same: each standard limits the amount available from a third party to pay for the carrier’s services. We also note that, as explained in Part IV, PHI’s view of preemption would prevent the State Bar from having any reimbursement policy at all for airline travel.

18

In addition, Texas’s fact-driven standard of fair and reasonable reimbursement differs from the fixed maximum fee cap at issue in EagleMed, as we discuss further below.

19

The workers’ compensation insurance policies do not independently require reimbursement, as they rely on the state statutory and regulatory requirements PHI claims are preempted to define the insurers’ contractual reimbursement obligations.

20

See Air Methods/Rocky Mtn. Holdings, LLC v. State ex rel. Dep’t of Workforce Servs., 432 P.3d 476, 485–87 (Wyo. 2018).

21

See Office of Injured Employee Counsel’s Amicus Curiae Brief in Support of Petitioners at 17–18.

1

See U.S. Dep’t of Treasury v. Fabe, 508 U.S. 491, 502–03, 113 S.Ct. 2202, 124 L.Ed.2d 449 (1993); see also Fredericksburg Care Co. v. Perez, 461 S.W.3d 513, 522 (Tex. 2015) (“Examples of practices that fall within the scope of [the business of insurance] include.... the writing of insurance contracts and the actual performance of those contracts.”).

2

15 U.S.C. § 1012(b). See TEX. LAB. CODE § 402.021(a)(3) (providing that one of “the basic goals of the workers’ compensation system” is that “each injured employee shall have access to prompt, high-quality medical care within the framework established by this subtitle”), (b)(8) (stating that system participants “include insurance carriers” and “health care providers,” which must abide by its laws and regulations).

3

15 U.S.C. § 1012(b). McCarran–Ferguson is divided into two clauses—the second clause deals with antitrust matters and is relevant here only to the extent that it informs our reading of the first clause. See Fredericksburg, 461 S.W.3d at 518.

4

SEC v. Nat’l Sec., Inc., 393 U.S. 453, 458, 89 S.Ct. 564, 21 L.Ed.2d 668 (1969). McCarran–Ferguson was enacted after the Supreme Court’s decision in United States v. South-Eastern Underwriters Ass’n, in which the Court held that Congress had power under the Commerce Clause to regulate insurance transactions stretching across state lines. 322 U.S. 533, 552–53, 64 S.Ct. 1162, 88 L.Ed. 1440 (1944). “Prior to that decision, it had been assumed that ‘[i]ssuing a policy of insurance [was] not a transaction of commerce,’ subject to federal regulation.” Fabe, 508 U.S. at 499, 113 S.Ct. 2202 (first alteration in original) (citation omitted). Before South-Eastern Underwriters, “the States enjoyed a virtually exclusive domain over the insurance industry.” Id. (quoting St. Paul Fire & Marine Ins. Co. v. Barry, 438 U.S. 531, 539, 98 S.Ct. 2923, 57 L.Ed.2d 932 (1978)).

5

Nat’l Sec., Inc., 393 U.S. at 459, 89 S.Ct. 564; see Fabe, 508 U.S. at 500, 113 S.Ct. 2202 (“Congress moved quickly to restore the supremacy of the States in the realm of insurance regulation.”).

6

Nat’l Sec., Inc., 393 U.S. at 458, 89 S.Ct. 564 (quoting Prudential Ins. Co. v. Benjamin, 328 U.S. 408, 429, 66 S.Ct. 1142, 90 L.Ed. 1342 (1946)); see Fabe, 508 U.S. at 505, 113 S.Ct. 2202 (“[T]he first clause of § 2(b) was intended to further Congress’ primary objective of granting the States broad regulatory authority over the business of insurance.”).

7

Ante at ––––; see Safety Nat’l Cas. Corp. v. Certain Underwriters at Lloyd’s, London, 543 F.3d 744, 748 (5th Cir. 2008).

8

Fredericksburg, 461 S.W.3d at 518–19 (quoting Munich Am. Reinsurance Co. v. Crawford, 141 F.3d 585, 590 (5th Cir. 1998)).

9

Id. at 520.

10

Id. (alteration in original) (quoting 20801, Inc. v. Parker, 249 S.W.3d 392, 396 (Tex. 2008)).

11

See TEX. LAB. CODE § 413.011 (reimbursement guidelines and protocols); 28 TEX. ADMIN. CODE §§ 134.1 (medical reimbursement), .203 (medical fee guideline for professional services); Fredericksburg, 461 S.W.3d at 525 (“Because the test to determine whether laws are enacted for the purpose of regulating the business of insurance is broad, it is possible that a law, in its entirety, would fail to qualify for [McCarran–Ferguson’s] exemption from preemption, but a specific statutory provision could qualify by ‘possess[ing] the end, intention, or aim of adjusting, managing, or controlling the business of insurance.’ ” (second alteration in original) (quoting U.S. Dep’t of Treasury v. Fabe, 508 U.S. 491, 505, 113 S.Ct. 2202, 124 L.Ed.2d 449 (1993))).

12

393 U.S. 453, 460, 89 S.Ct. 564, 21 L.Ed.2d 668 (1969).

13

Id.

14

508 U.S. at 505, 113 S.Ct. 2202.

15

Id. at 493, 504, 113 S.Ct. 2202 (“[W]e must decide whether a state statute establishing the priority of creditors’ claims in a proceeding to liquidate an insolvent insurance company is a law enacted ‘for the purpose of regulating the business of insurance,’ within the meaning of § 2(b) of the McCarran–Ferguson Act.”). The Supreme Court had only once before “had occasion to construe this phrase,” in National Securities. Id. at 501, 113 S.Ct. 2202.

16

Id. at 493, 505, 113 S.Ct. 2202 (quoting Nat’l Sec., Inc., 393 U.S. at 460, 89 S.Ct. 564).

17

Id. at 500, 113 S.Ct. 2202 (quoting 15 U.S.C. § 1011).

18

Id. at 502–03, 113 S.Ct. 2202.

19

Id. at 503, 113 S.Ct. 2202.

20

Under the Act, an “insurance carrier” is “an insurance company.” TEX. LAB. CODE § 401.011(27).

21

Id. § 401.011(28).

22

In re Poly-Am., L.P., 262 S.W.3d 337, 352 (Tex. 2008) (orig. proceeding); see also Tex. Mut. Ins. Co. v. Ruttiger, 381 S.W.3d 430, 448 (Tex. 2012) (“The 1989 reforms were intended to reduce the costs to employers and provide greater benefits to injured employees in a more timely fashion. Achieving those goals required, among other changes, reducing the disparity of bargaining power between the employee and insurer....”). We further explained in In re Poly-America:

The Texas Legislature enacted the original Workers’ Compensation Act in 1913 in response to the needs of workers who, despite a growing incidence of industrial accidents, were increasingly being denied recovery. In order to ensure compensation for injured employees while protecting employers from the costs of litigation, the Legislature provided a mechanism by which workers could recover from subscribing employers without regard to the workers’ own negligence, while limiting the employers’ exposure to uncertain, possibly high damage awards permitted under the common law.

262 S.W.3d at 350 (citations omitted).

23

Aranda v. Ins. Co. of N. Am., 748 S.W.2d 210, 212 (Tex. 1988), overruled on other grounds by Ruttiger, 381 S.W.3d at 433.

24

TEX. LAB. CODE § 408.001.

25

Id. § 402.001(a). “The division of workers’ compensation is established as a division within the Texas Department of Insurance to administer and operate the workers’ compensation system of this state as provided by this title.” Id. § 402.001(b).

26

Fairfield Ins. Co. v. Stephens Martin Paving, LP, 246 S.W.3d 653, 658 (Tex. 2008). These state-approved policies are contracts between private insurance companies and employers; the employees of subscribing employers are the beneficiaries, and health care providers claim direct benefits under the policy. See TEX. LAB. CODE §§ 406.003, .051, 408.001. Though optional, the Act incentivizes employers to obtain coverage. Id. §§ 406.004 (requiring employers who do not obtain coverage to notify the Division), .007 (requiring notice of termination of coverage), .033 (forbidding an employer from using certain defenses in an action brought by an employee not covered by workers’ compensation insurance). Similarly, though employees may opt out of coverage, it is disfavored. See Port Elevator-Brownsville, L.L.C. v. Casados, 358 S.W.3d 238, 241 (Tex. 2012); TEX. LAB. CODE § 406.034(b).

27

TEX. LAB. CODE § 406.031(a).

28

Id. § 414.004(a); see also id. § 414.002(a)(3) (“The division shall monitor for compliance with commissioner rules, this subtitle, and other laws relating to workers’ compensation and the conduct of persons subject to this subtitle. Persons to be monitored include ... insurance carriers.”).

29

See, e.g., id. §§ 402.021(b)(8) (“It is the intent of the legislature that ... the workers’ compensation system of this state must ... effectively educate and clearly inform each person who participates in the system as a claimant, employer, insurance carrier, health care provider, or other participant of the person’s rights and responsibilities under the system and how to appropriately interact within the system.”), 408.021(d) (“An insurance carrier’s liability for medical benefits may not be limited or terminated by agreement or settlement.”), 408.024 (“[T]he commissioner may relieve an insurance carrier of liability for health care that is furnished by a health care provider or another person selected in a manner inconsistent with the requirements of this subchapter.”), 415.002–.003 (enumerating administrative violations by an “insurance carrier” and a “health care provider”).

30

Id. § 406.051(a).

31

Id. § 406.051(b); see also TEX. INS. CODE § 2052.002(a) (“The commissioner shall prescribe standard policy forms and a uniform policy for workers’ compensation insurance.”).

32

Transcon. Ins. Co. v. Crump, 330 S.W.3d 211, 233 (Tex. 2010) (Johnson, J., concurring). State law may itself form a term of the insurance policy, incorporated by reference. Am. Bankers Ins. Co. of Fla. v. Inman, 436 F.3d 490, 494 (5th Cir. 2006).

33

See TEX. LAB. CODE § 413.011; 28 TEX. ADMIN. CODE §§ 134.1(a), (e)–(f), .203.

34

TEX. LAB. CODE §§ 408.027(a) (“A health care provider shall submit a claim for payment to the insurance carrier....”), 413.042 (“A health care provider may not pursue a private claim against a workers’ compensation claimant for all or part of the cost of a health care service provided to the claimant by the provider unless: (1) the injury is finally adjudicated not compensable ...; or (2) the employee violates Section 408.22 relating to the selection of a doctor....”).

35

See ante at ––––. Section 413.011 directs the commissioner to “adopt health care reimbursement policies and guidelines that reflect the standardized reimbursement structures found in other health care delivery systems.” TEX. LAB. CODE § 413.011(a). It provides that the “[f]ee guidelines must be fair and reasonable and designed to ensure the quality of medical care and to achieve effective medical cost control.” Id. § 413.011(d). The rules specify that “ ‘[m]aximum allowable reimbursement’ ... is defined as the maximum amount payable to a health care provider in the absence of a contractual fee arrangement that is consistent with § 413.011 of the Labor Code, and Division rules.” 28 TEX. ADMIN. CODE § 134.1(a). Further, “fair and reasonable reimbursement” must:

(1) be consistent with the criteria of Labor Code § 413.011;

(2) ensure that similar procedures provided in similar circumstances receive similar reimbursement; and

(3) be based on nationally recognized published studies, published Division medical dispute decisions, and/or values assigned for services involving similar work and resource commitments, if available.

Id. § 134.1(f).

36

Ante at –––– (“Each insurance policy incorporates these laws and regulations, obligating the insurer to pay the benefits they require.”); see also TEX. DEP’T OF INS., TEXAS WORKERS’ COMPENSATION AND EMPLOYERS’ LIABILITY MANUAL, WORKERS’ COMPENSATION & EMPLOYERS LIABILITY INSURANCE POLICY: WC 00 00 00 B (2d reprt. 2011), https://www.tdi.texas.gov/wc/regulation/documents/endform.pdf. The standard policy form states: “We will pay promptly when due the benefits required of you by the workers[’] compensation law.” Id. at Sec. B. It further provides: “This insurance conforms to the parts of the workers[’] compensation law that apply to ... benefits payable by this insurance.” Id. at Sec. H.

37

See TEX. LAB. CODE § 406.051(b) (“The contract for coverage must be written on a policy and endorsements approved by the Texas Department of Insurance.”); Fairfield Ins. Co. v. Stephens Martin Paving, LP, 246 S.W.3d 653, 658 (Tex. 2008) (“[I]f the employer purchases workers’ compensation insurance, the employer must adhere to the statutory and regulatory guidelines of the Workers’ Compensation Act. Among these requirements is the legislative directive that only workers’ compensation policies approved by the Texas Department of Insurance are available in Texas.”); see also Wausau Underwriters Ins. Co. v. Wedel, 557 S.W.3d 554, 557 (Tex. 2018) (noting that the Department of Insurance has “promulgated and mandated [endorsements] for use in Texas workers’-compensation policies” and opining that the waiver at issue accordingly was “not freely negotiated by the parties” and “no ordinary policy”).

38

U.S. Dep’t of Treasury v. Fabe, 508 U.S. 491, 502–03, 113 S.Ct. 2202, 124 L.Ed.2d 449 (1993).

39

Ante at –––– (“In many States, a government entity acts as the employers’ insurer, paying benefits to injured workers and reimbursing certain expenses they have incurred. In Texas, however, employers contract with private insurance carriers to perform these functions, and state laws and regulations define the insurers’ obligations to reimburse health care providers for their services to covered workers.” (citing TEX. LAB. CODE § 406.051)); see also TEX. LAB. CODE §§ 406.002 (“Except for public employers and as otherwise provided by law, an employer may elect to obtain workers’ compensation insurance coverage.”), .003 (“An employer may obtain workers’ compensation insurance coverage through a licensed insurance company or through self-insurance as provided by this subtitle.”).

40

Fabe, 508 U.S. at 505, 113 S.Ct. 2202.

41

868 F.3d 893, 905 (10th Cir. 2017).

42

Id. at 897.

43

Id. at 904 (emphasis added).

44

Id. at 905; see also Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 129–30, 102 S.Ct. 3002, 73 L.Ed.2d 647 (1982); Grp. Life & Health Ins. Co. v. Royal Drug Co., 440 U.S. 205, 213–14, 99 S.Ct. 1067, 59 L.Ed.2d 261 (1979).

45

Thus, the argument in EagleMed that no risk is underwritten or spread by Wyoming’s laws and regulations is inapplicable. EagleMed LLC, 868 F.3d at 905.

46

Royal Drug Co., 440 U.S. at 210, 232–33, 99 S.Ct. 1067.

47

Id. at 214, 99 S.Ct. 1067.

48

Id. at 215, 99 S.Ct. 1067.

49

Id. at 210, 99 S.Ct. 1067.

50

Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 126, 102 S.Ct. 3002, 73 L.Ed.2d 647 (1982).

51

U.S. Dep’t of Treasury v. Fabe, 508 U.S. 491, 505, 113 S.Ct. 2202, 124 L.Ed.2d 449 (1993).

52

Id. at 504, 113 S.Ct. 2202 (alterations in original). The Supreme Court “refuse[d]” to “read words out of the statute.” Id.

53

Royal Drug Co., 440 U.S. at 216, 99 S.Ct. 1067.

54

458 U.S. at 126, 102 S.Ct. 3002.

55

Id. at 132, 134, 102 S.Ct. 3002.

56

Fabe, 508 U.S. at 503, 113 S.Ct. 2202.

57

Fredericksburg Care Co. v. Perez, 461 S.W.3d 513, 521 (Tex. 2015).

58

Pireno, 458 U.S. at 129, 102 S.Ct. 3002.

59

Fredericksburg, 461 S.W.3d at 521 (quoting Munich Am. Reinsurance Co. v. Crawford, 141 F.3d 585, 590–91 (5th Cir. 1998)); see also Pireno, 458 U.S. at 129, 102 S.Ct. 3002. In Fredericksburg, we held that a law relating to agreements to arbitrate health care liability claims under the Texas Medical Liability Act was not enacted “for the purpose of regulating the business of insurance.” 461 S.W.3d at 528. Unlike the Texas Workers’ Compensation Act, the law at issue in that case has “no bearing on whether a claim is paid or coverage is denied, nor does it prescribe the terms of insurance contracts or set the rates that insurance companies can charge.” Id. at 525. In contrast, the Workers’ Compensation Act mandates the “type” of policy that must be issued and payments that a carrier is obligated to make under the policy. Establishing an insurance framework is not central to the Medical Liability Act. “Insurance carrier” and “insurance company” are not even defined terms. See TEX. CIV. PRAC. & REM. CODE § 74.001.

60

We applied the Pireno factors in Fredericksburg to assist with our analysis of McCarran–Ferguson’s first clause, noting that they were “non-dispositive.” 461 S.W.3d at 521.

61

Fabe, 508 U.S. at 503–04, 113 S.Ct. 2202.

62

In Genord v. Blue Cross & Blue Shield of Michigan, the Sixth Circuit held that McCarran–Ferguson did not shield Blue Cross from a federal civil RICO claim. 440 F.3d 802, 803, 809 (6th Cir. 2006). In Genord, doctors sued to enforce their third-party billing agreements with Blue Cross, alleging that Blue Cross “systematically denied” payments, as the agreements required. Id. at 804. Relying on Royal Drug, the Sixth Circuit held that these third-party billing agreements did not have the “aim of regulating a practice that has the effect of transferring or spreading policyholder risk” and thus were ancillary to the policy relationship. Id. at 806, 808. The Sixth Circuit instead characterized the provisions as merely regulating “billing-code invoicing arrangement[s] with health care providers.” Id. at 808. Unlike the doctors in Genord, PHI Air does not seek to enforce a third-party agreement, nor does it allege that an insurer has failed to perform under a third-party agreement. To the extent a reimbursement rate is mandated by Texas law as part of the coverage afforded under the policy, it is an integral part of an insurance policy.

1

I agree with the Court that PHI qualifies as an air carrier as defined by the ADA.

2

To be sure, parts of the TWCA very well may be laws enacted for the purpose of regulating the business of insurance, and the concurrence today notes a few in its analysis. However, those provisions, while instructive on whether the TWCA was enacted to regulate the business of insurance, do not transform the TWCA into such a law. Rather, the MFA would protect those provisions from preemption if challenged. See U.S. Dep’t of Treasury v. Fabe, 508 U.S. 491, 508–09, 113 S.Ct. 2202, 124 L.Ed.2d 449 (1993) (holding that only part of an Ohio statute prioritizing certain creditors and policyholders over the federal government in bankruptcy was a law enacted for the purpose of regulating the business of insurance). And, as discussed in Part II.B, the provisions that are directly challenged—the reimbursement scheme that regulates what an insurer must pay a provider—fall short of how the Supreme Court has interpreted and applied the MFA.

3

The Act even said as much: “An Act relating to employers’ liability and providing for the compensation of certain employe[e]s and their representative and beneficiaries....” Act of Mar. 29, 1913, 33d Leg., R.S., ch. 179, 1913 Tex. Gen. Laws 429, 429.

4

For instance, imagine there are two employees: Employee A and Employee B. Employee A’s employer elects to opt into workers’ compensation and Employee B’s employer does not. See TEX. LAB. CODE § 406.002(a). Both employees are injured. Ideally, under the workers’ compensation laws, both Employee A and Employee B should have a sufficient remedy to redress their injuries. However, Employee B would not recover through workers’ compensation insurance, but because the TWCA forecloses non-subscribing employers from invoking common law defenses to recovery. See id. § 406.033(a). The concurrence’s understanding of the TWCA—that it was enacted for the purpose of regulating the business of insurance—does not acknowledge that the employer, and not insurance, is the source of Employee B’s recovery. That is not how we interpret statutes. Instead, we interpret statutes to give meaning to the statute as a whole and render no part superfluous. See TEX. GOV’T CODE § 311.021(2); Ritchie v. Rupe, 443 S.W.3d 856, 898 (Tex. 2014) (Guzman, J., dissenting); In re Lee, 411 S.W.3d 445, 453 (Tex. 2013). A reading that would leave unacknowledged half of an employee’s available means of recovery does not honor that command. And this hypothetical does not account for the possibility of a third employee—Employee C—whose employer may utilize common law defenses because the employer opted into workers’ compensation insurance while Employee C opted out. See TEX. LAB. CODE § 406.034(d).

5

The first clause of the MFA reads: “No Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance, or which imposes a fee or tax upon such business....” 15 U.S.C. § 1012(b). The second clause allows application of the Sherman Act and Clayton Act “to the business of insurance to the extent that such business is not regulated by State law.” Id.

6

The concurrence notes that the reimbursement scheme identifies the scope of coverage, but the scope of coverage is determined by the policy and whether the employee incurs a medical benefit as determined by the policy. Ante at ––––; see Exxon Mobil Corp. v. Ins. Co. of the State of Pa., 568 S.W.3d 650, 657 (Tex. 2019). The reimbursement scheme dictates the amount an insurer will pay for the policy obligation, and the Supreme Court has recognized that an arrangement that will limit an insurer’s costs for obligations arising under a policy is not the business of insurance. See Grp. Life & Health Ins. Co. v. Royal Drug Co., 440 U.S. 205, 213–14, 99 S.Ct. 1067, 59 L.Ed.2d 261 (1979). And notably, but for the balance-billing prohibition that prevents a health care provider from recouping the remainder of the unpaid bill from the injured employee, see TEX. LAB. CODE § 413.042, any additional payment would be sought from the injured employee and not the policy-holding employer. Thus, the scope of the benefit is not the amount the service will cost but whether the service qualifies for the type of coverage provided.

7

The concurrence concludes that the reimbursement scheme spreads policy risk because it assists in determining policy premiums. Ante at ––––. But a policyholder’s receipt of a benefit through an insurance company’s reduced cost risk is not spreading policyholder risk. Royal Drug, 440 U.S. at 211, 214, 99 S.Ct. 1067. Commonly referred to as the Law of Large Numbers, risk sharing is risk aversion, which insurance companies accomplish by increasing the number of policyholders within a pool to make losses more predictable. See Michael Murray, The Law of Describing Accidents: A New Proposal for Determining the Number of Occurrences in Insurance, 118 YALE L.J. 1484, 1491–92 (2009). The Supreme Court in Royal Drug rejected the insurers’ argument that arrangements with third parties that limit the amount insurers must pay for policyholder claims represent risk sharing. 440 U.S. at 211 & n.7, 99 S.Ct. 1067. Instead, the Court concluded such arrangements are risk reduction. Id. Similarly, the TWCA’s reimbursement scheme does not add to the pool of policyholders—risk share—it limits the amount that an insurance company must pay—risk reduction—to satisfy obligations to a medical service provider. See id. Whether an insurance company’s reimbursement obligation to a provider is limited because the insurance company optionally entered into such an arrangement, or because the arrangement was prescribed by statute, has no bearing on whether the arrangement amounts to risk sharing. Genord, 440 F.3d at 804, 806–07. This is true even if the reimbursement arrangement results in benefits to the policyholder in the form of lower premiums. Royal Drug, 440 U.S. at 214, 99 S.Ct. 1067 (footnote omitted) (“Such cost-savings arrangements may well be sound business practice, and may well inure ultimately to the benefit of policyholders in the form of lower premiums, but they are not the ‘business of insurance.’ ”).

Supreme Court of Texas.

MO-VAC SERVICE COMPANY, INC., Petitioner

v.

Primitivo ESCOBEDO, Individually, San Juanita Escobedo, Individually, and Martha Escobedo, Individually and as Representative of the Estate of Fabian Escobedo, Respondents

No. 18-0852

|

Argued February 26, 2020

|

Opinion delivered: June 12, 2020

*120 ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE THIRTEENTH DISTRICT OF TEXAS

Opinion

Chief Justice Hecht delivered the opinion of the Court.

The Texas Workers’ Compensation Act (the Act) provides that statutory benefits are the exclusive remedy for a covered employee or his legal beneficiary against his employer for work-related injury or death.1 But in upholding the Act in 1916, three years after it was passed, we excepted an action for intentional injury to an employee that we viewed as protected by the Texas Constitution’s Open Courts provision.2 The Legislature has never codified or rejected that intentional-injury exception *121 to the Act’s exclusive remedy, and we have reaffirmed it.3

Relying on the Restatement (Second) of Torts, we have defined intent as having two parts, one purposive—that “the actor desires to cause consequences of his act”—and the other shown by his “belie[f] that the consequences are substantially certain to result from it.”4 The latter component has proven difficult to apply, in Texas and elsewhere, especially in workers’ compensation cases.5 The case before us presents the opportunity to provide clarification.

We reverse the judgment of the court of appeals6 and render judgment for the petitioner employer.

I

Petitioner Mo-Vac Service Company, Inc. is a trucking and warehousing company servicing the oil patch from several Texas cities including Dilley, a small town some 70 miles southwest of San Antonio. Mo-Vac employed more than 30 drivers operating out of the Dilley yard, hauling liquids to and from drilling sites in eighteen-wheeler tanker trucks. One of them, Fabian Escobedo, 48, a 12-year employee, died when his rig ran off the highway and rolled over in the early morning hours of May 30, 2012. His estate representative is suing to recover damages for his pain and suffering before he died.7

Plaintiff contends that Escobedo fell asleep at the wheel due to fatigue from being forced to work grueling hours. Mo-Vac is a subscriber to the workers’ compensation system. As we explain more fully below, Plaintiff can succeed only by proving that Mo-Vac intentionally caused Escobedo’s accident in the sense that it believed the accident was “substantially certain to result” from his being overworked.8 There is evidence that Mo-Vac forced Escobedo to work excessive hours. The question is whether there is any evidence that Mo-Vac believed his accident was substantially certain to result.

Escobedo’s time records show that in the eight days leading up to the accident, he worked 137 hours, averaging 17 hours a day. He worked 20 hours three days before *122 the accident, 14 hours two days before, and 19 hours the previous day—in total, all but 19 hours out of 72.9 Plaintiff’s expert estimated that the day before the accident, Escobedo had only a few hours’ rest before leaving the Dilley yard about 9:00 p.m. to make deliveries at two wellsites. The expert further estimated that Escobedo arrived at the first well about 9:30 p.m. and the second about 1:30 a.m., staying an hour at each. He traveled a two-lane state highway that he knew well. About 3:00 a.m., 30 minutes into his three-hour return to Dilley, Escobedo rounded a slight curve to the left in a rural area, struck a delineator pole, and veered onto the improved right-hand shoulder and a grassy area. He tried to swerve back onto the highway but overcorrected, rolling his truck and trailer. He was not wearing a seat belt and died of positional asphyxia.

Mo-Vac was pushing all its drivers hard to keep up with business demands in the west and south Texas oil boom. Their working conditions are described in an affidavit by their manager, Urbano Garza, as follows.10

Garza stated that he was “forced” by “clear directive” from upper management “to have the drivers work unsafe hours rather than let a competitor get the jobs which were demanded by our customers.” Even though it was “obviously unsafe to nearly everyone in company management,” Mo-Vac drivers were “routinely working 100 hours or more per week” and “19 to 24 hours straight—day after day.” “It was becoming insane.” If he “mentioned it as a concern”, Garza said, he “would get an ‘ear full’ or a verbal reprimand from [his] supervisors about keeping production up at all costs.” Because Mo-Vac was not adding enough drivers, “[m]aking the current drivers do overtime was the only way to get the production higher.” In the frenzied months before Escobedo’s accident, he had logged as many as 138 hours of overtime for a two-week pay period and other drivers logged even more. The record reflects that several Mo-Vac drivers had logged well over 200 hours of overtime in a single paycheck period.

According to Garza, Mo-Vac knew its drivers’ hours violated state standards and encouraged them to “alter their work logs to appear that they were in compliance with DOT sleep and rest regulations”. Mo-Vac’s compliance clerk, Garza said, reportedly walked drivers “through the process of cheating” on their logs, moving work from one day to another. The clerk told drivers that doing so would “make it appear that they did not exceed the number of straight hours worked” without rest. Garza stated that senior management “indicated that they were aware of the practice and nevertheless encouraged it.” When supervisors expressed safety concerns, they were “shut down” by management. Garza said Mo-Vac’s operations manager, Mike Flanagan, “would tell me *123 to get the numbers [of driving hours] up and told me to simply tell the drivers ‘don’t get killed out there.’ ” Garza was kept so busy managing the production Mo-Vac “insisted upon” that it was “impossible for [him] to monitor” the hours of “each and every one of the drivers.”

Garza’s affidavit continues:

When I mentioned to Mr. Flanagan that one of our drivers was going to get killed because of our insistence on unreasonable driving hours, he said to me: “we will cross that bridge when we come to it.” His verbal statements and interactions with me and other staff members demonstrated to me that he was clearly anticipating an eventual injury or death, but intentionally pressed for more production because of the opportunity to make immediate money. By his actions and statements he made it clear that he did not want anything (including compliance with safe rest periods) to get in the way. From what I personally observed of upper management’s behavior at MoVac in 2012, and at the time of Mr. Escobedo’s death, they demonstrated verbally that they were plainly aware of the substantial certainty that one of my drivers, including Mr. Escobedo, would be injured or killed due to overwork. What I witnessed was not mere carelessness or recklessness. It was intentional conduct that I observed. They made it clear, through their actions and words, that they were more concerned with the immediate prospect of making money—even when I verbally confronted them with the clear and certain tragedy waiting to happen. Mr. Flanagan was not simply dismissive of the possibility of a crash—instead, on more than one occasion, he acknowledged to me his awareness that a crash was inevitable and indicated to me that we should press on with getting the production up, because there was money to be made.

To make matters worse, Garza stated, drivers had poor sleeping conditions. Trucks did not have sleeper berths, and Mo-Vac encouraged drivers “to sleep on a sheet of plywood stretched across their seats.” “[W]orking long hours”, he said, “it [wa]s difficult to get by with catnaps”. Mo-Vac managers “knew this, and really did not care.”

“Based on what I observed as company policy and practice,” Garza concluded, “the cause of Mr. Escobedo’s death was fatigue caused by an intentional practice of overworking drivers and falsifying logs.”

[F]rom what I observed, it would be simply impossible for the management at MoVac to have been unaware in May of 2012 that they were going to cause an injury or death. They intentionally placed my drivers, including Mr. Escobedo, in a situation that they acknowledged was substantially certain to injure or kill one of the drivers. They wanted to make money. From what I observed, Mr. Escobedo’s death was caused by greed.11

The trial court granted Mo-Vac’s no-evidence motion for summary judgment. The court of appeals reversed and remanded, concluding that whether Mo-Vac believed its conduct was substantially certain to cause Escobedo’s death remained an issue of fact.12

We granted Mo-Vac’s petition for review.

*124 II

Plaintiff does not contend that Mo-Vac purposefully killed Escobedo but instead that Mo-Vac believed his accident was substantially certain to result from being overworked.

A

“The Texas Legislature enacted the Act in 1913 in response to the needs of workers, who, despite escalating industrial accidents, were increasingly being denied recovery.”13 “Covered employees sustaining work-related injuries are guaranteed prompt payment of their medical bills and lost wages without the time, expense, and uncertainty of proving liability under common-law theories.”14 The employee may “recover without establishing the employer’s fault and without regard to the employee’s negligence.”15 “In exchange, the Act prohibits employees from seeking common-law remedies from their employers by making workers’ compensation benefits an injured employee’s exclusive remedy.”16 “The Act ultimately struck a bargain that allows employees to receive ‘a lower, but more certain, recovery than would have been possible under the common law.’ ”17

Whether that bargain “violate[d] any of [employers’ or employees’] fundamental rights” was decided by this Court three years later in Middleton v. Texas Power & Light Co.18 Analyzing the Act and its consequences in detail, we easily answered no for employers because the Act left them “free to adopt its plan of compensation, or remain ungoverned by it.”19 As for employees, we held that the Legislature could substitute statutory remedies for those at common law.20 But “[h]ere”, we said, “the character of injuries, or wrongs, dealt with by the Act becomes important. Notwithstanding the breadth of some of its terms, its evident purpose was to confine its operation to only accidental injuries, and its scope is to be so limited.”21 Noting that Article I, § 13 of the Texas Constitution preserves for “every person for an injury done him ... [a] remedy by due course of law”, we stated that it was

not to be doubted that the Legislature is without the power to deny the citizen the right to resort to the courts for the redress of any intentional injury to his person by another. Such a cause of action may be said to be protected by the Constitution and could not be taken away; nor could the use of the courts for its enforcement be destroyed. This Act does not affect the right of redress for that class of wrongs. The injuries, or wrongs, with which it deals are accidental injuries or wrongs.22

Both the Act and the Constitution drew a distinction between accidental and intentional injuries. Article XVI, § 26 of the Constitution provided, as it still does, that “[e]very person...that may commit a homicide, through wilful act, or omission, *125 or gross neglect, shall be responsible, in exemplary damages, to the surviving [spouse and the] heirs of his or her body”.23 The 1913 Act excepted such actions from its exclusive remedy.24 Critical to our assessment of the Act’s balance of employers’ and employees’ competing interests was its limitation to accidental injuries.

The exclusive-remedy provision is essential to the Act’s continued success. As we wrote in Reed Tool Co. v. Copelin, “[i]f employers are required to provide not only workers’ compensation but also to defend and pay for accidental injuries, their ability to spread the risk through reasonable insurance premiums is threatened, and the balance of advantage and detriment [between employers and employees] would be significantly disturbed.”25 The Legislature has amended the Act many times since 1913. It has never codified or rejected Middleton’s intentional-injury exception. After an overhaul of the Act in 1993, we noted that “[t]here is no express provision in either [what is now the current Act] or the former act expressly excluding coverage for an injury resulting from an employer’s intentional tort.”26 We concluded that the current Act “embodies the rule of Middleton and its progeny.”27

B

We did not have occasion to interpret Middleton’s intentional-injury exception until 1985 in Reed Tool. There, a Reed Tool machine shop employee, Copelin, was injured when a chain tong on a lathe he was operating hit him in the head, leaving him severely brain-damaged and in a coma. Copelin’s wife sued, alleging that Reed Tool had intentionally injured Copelin by requiring him to operate a machine despite knowing that it was defective and unsafe and that he was not properly trained. She further alleged that Reed Tool required him to work long hours in violation of applicable regulations.

We began by defining intentional injury. We first distinguished intent from other mental states. “The fundamental difference between negligent injury, or even grossly negligent injury, and intentional injury”, we said, “is the specific intent to inflict injury.”28 We then looked to the Restatement (Second) of Torts, which defined intent to mean that “the actor desires to cause consequences of his act, or that he believes that the consequences are substantially certain to result from it.”29 In the first part of the definition, the actor is purposeful, as for example, if he drew back and slugged his victim on the jaw. Though the second part of the definition is something less than purposeful, we determined that “[t]he overwhelming weight of authority from other jurisdictions is that the common law liability of the employer cannot be stretched to include accidental injuries caused by the gross, wanton, willful, deliberate, intentional, reckless, culpable, or malicious negligence, breach of statute, or other misconduct of the employer short *126 of genuine intentional injury.”30 Finally, we observed, quoting one authority:

Even if the alleged conduct goes beyond aggravated negligence and includes such elements as knowingly permitting a hazardous work condition to exist, knowingly ordering claimant to perform an extremely dangerous job, wilfully failing to furnish a safe place to work, or even wilfully unlawfully violating a safety statute, this still falls short of the kind of actual intention to injure that robs the injury of its accidental character.31

The results might seem harsh, we conceded, but the determinative factor must be, “not the gravity or depravity of the employer’s conduct but rather the narrow issue of intentional versus accidental quality of the injury.”32 The exclusive remedy is critical to the “continued effectiveness of the worker’s compensation scheme”.33 “The intentional removal of a safety device or toleration of a dangerous condition may or may not set the stage for an accidental injury later”, we said, “[b]ut in any normal use of the words, it cannot be said, if such an injury does happen, that this was deliberate infliction of harm comparable to an intentional left jab to the chin.”34 Accordingly, we held, “the intentional failure to furnish a safe place to work does not rise to the level of intentional injury except when the employer believes his conduct is substantially certain to cause the injury.”35

Plaintiff’s evidence of Reed Tool’s intent was that “[t]he machine was nicknamed ‘jaws,’ and some employees did not want to operate it”; that “[t]here had been prior injuries on most of the lathes ... as well as that particular machine”, but that “[n]one ... was debilitating, disabling, or in any way as serious” as Copelin’s; and that “Reed Tool employees sometimes had to work twelve-hour shifts, seven days a week.”36 Copelin’s supervisor testified that “Copelin was working 12-hour shifts and looked ‘zonked.’ ”37 While that evidence “might raise a question of fact concerning gross negligence,” we said, “it does not raise a question of fact that Reed Tool knew with substantial certainty that [Copelin] would be injured.”38 We reversed the judgment of the court of appeals and affirmed summary judgment for Reed Tool.

C

The definition of intent we drew in Reed Tool from the Restatement (Second) of Torts was not original with that edition. It was taken from the discussion of the intentional tort of battery in § 13 of the first Restatement of Torts. Battery was there defined as “[a]n act which, directly or indirectly, is the legal cause of a harmful contact with another’s person”.39 One element of the tort was that “the act [be] done with the intention of bringing about a harmful or offensive contact or an apprehension thereof”.40 To be intentional, comment d explained:

*127 the act must be done for the purpose of causing the contact or apprehension or with knowledge on the part of the actor that such contact or apprehension is substantially certain to be produced. It is not enough that the act itself is intentionally done and this, even though the actor realizes or should realize that it contains a very grave risk of bringing about the contact or apprehension. Such realization may make the actor’s conduct negligent or even reckless but unless he realizes that to a substantial certainty, the contact or apprehension will result, the actor has not that intention which is necessary to make him liable under the rule stated in this Section.41

The use of “the” and “such” make clear that an actor’s intent must be directed toward a particular contact or apprehension, not merely a possibility of some contact or apprehension. This specificity is to be expected for a tort that involves an actor and an identifiable victim.

Section 8A of the Restatement (Second) of Torts extrapolated from comment d a general definition of “intent” which we quoted in Reed Tool: “that the actor desires to cause consequences of his act, or that he believes that the consequences are substantially certain to result from it.”42 Comment b explained that “[i]f the actor knows that the consequences are certain, or substantially certain, to result from his act, and still goes ahead, he is treated by the law as if he had in fact desired to produce the result.”43 The use of “consequences”, while appropriate for a more general definition of intent applicable to acts other than battery, raises a subtle ambiguity. Are the “consequences” the ultimate result—for example, a personal injury—or the situation out of which the ultimate result arises? Injuries from motor vehicle accidents are certain to occur. The chances that you will be the injured person, all things being equal, are tiny.

The third Restatement retains its predecessor’s definition of intent with a slightly clarifying change: “A person acts with the intent to produce a consequence if: (a) the person acts with the purpose of producing that consequence; or (b) the person acts knowing that the consequence is substantially certain to result.”44 The substitution of “a”, “that”, and “the” consequence for “consequences” indicates a discrete result more than a general situation. Thus, the third Restatement’s clarified definition confirms what we said in Reed Tool: the actor must intend the specific result, not merely the actions or circumstances leading up to the result.45

The third Restatement notes the difficulties courts have had applying the second Restatement’s definition of intent in workers’ compensation cases. “Often ... the most that can be said is that the employer has created a very dangerous job-site condition that the employer knows will eventually bring about an employee injury. Courts are divided in determining whether [that] situation justifies a tort claim by the *128 employee against the employer under the workers’-compensation intentional-torts exclusion.”46 The Restatement suggests that “[t]he applications of the substantial-certainty test should be limited to situations in which the defendant has knowledge to a substantial certainty that the conduct will bring about harm to a particular victim, or to someone within a small class of potential victims within a localized area.”47

But the localized-area limitation on applying the substantial-certainty test is problematic because it lacks definition. How small must a class of potential victims be? How small the localized area? How attenuated in time, distance, and other factors can the employer’s conduct be from the employee’s injury? No definite line can be drawn, and while the law is certainly accustomed to vague line-drawing, the balance drawn by the workers’ compensation system in providing quicker but limited benefits in exchange for the uncertainties and expense of litigation calls for as much certainty as can fairly be provided.

D

Even if a localized-area limitation on the substantial-certainty test for intent were advisable, we effectively rejected it in Reed Tool. Plaintiff’s argument for the intentional-tort exception to the Act’s exclusive-benefit provision was that the employee was injured working long hours, in a single workplace, with only a few other employees, on one particular lathe known to be dangerous, by that very danger. This evidence, we very plainly stated, “does not raise a question of fact that Reed Tool knew with substantial certainty that [Copelin] would be injured.”48 For the intentional-tort exception to apply, the plaintiff was required to show that Reed Tool believed it was substantially certain her husband would be injured. The determinative factor, we said, must be, “not the gravity or depravity of the employer’s conduct but rather the narrow issue of intentional versus accidental quality of the injury.”49 That certainty is necessary for the exclusive remedy, which, in turn, is critical to the “continued effectiveness of the worker’s compensation scheme”.50

We also said that “[t]he fundamental difference between negligent injury, or even grossly negligent injury, and intentional injury is the specific intent to inflict injury.”51 The third Restatement notes that the characterization, “specific”, has not been altogether useful for drawing distinctions in applying the substantial-certainty test.52 But in Reed Tool we referred *129 to “specific” intent in the sentence immediately preceding our quotation of the definition of intent from the second Restatement. In that context, we meant by “specific” that an employer’s belief that injury is substantially certain must be with respect to a particular employee from a definite risk. As we made clear, being overworked in an unsafe job environment is insufficient.

Plaintiff argues that requiring this degree of specificity will lead to absurd results. An actor who tosses a bomb with a slow-burning fuse into a roomful of people, Plaintiff suggests, will escape liability because he “did not know precisely when the bomb would explode and which people in the room it would kill.” But a lit bomb tossed into a room of people is not merely substantially certain to inflict harm; it is purposive and thus easily qualifies as intentional.53

Our decision in Rodriguez v. Naylor Industries, Inc. illustrates the evidence that is needed for the intentional-tort exception.54 Naylor’s employee, Rodriguez, was told by his supervisor, Cameron, to drive a specific delivery truck on a specific 250-mile route from Rockdale to Corpus Christi by way of Port Lavaca. Rodriguez inspected the truck’s six tires—two on the front axle and four on the rear—and reported to Cameron that they were cracked and had no tread and that the inner tube was even visible on one. Cameron responded: “That truck has to go to Port Lavaca and then ... to Corpus Monday morning .... Either take it or walk.”55 Some 70 miles into the trip, one of the front tires blew out. Rodriguez hitchhiked four miles to the nearest town, called another Naylor supervisor, Wallace, in Houston, about 100 miles away, and asked him to bring a spare tire. When Wallace arrived, he instructed Rodriguez to replace the ruined front tire with one of the back tires. Though Wallace knew it was illegal to drive the truck without all six tires, he told Rodriguez to continue driving to a place where they could get a new tire. Rodriguez continued the trip with Wallace following him. Sixty miles later, the lone back tire on one side blew out, causing the truck to flip over, injuring Rodriguez.

The evidence showed that Cameron had to know that driving the truck in its condition was substantially certain to result in a blowout resulting in a loss of control. Cameron’s order to “either drive the truck or walk” showed that he intended Rodriguez to risk the specific danger.56 When a blowout did occur, Wallace’s demand that Rodriguez keep driving also showed that he intended Rodriguez to continue to take a risk that was not only substantially certain but had already occurred once to the same driver in the same truck with the same problem an hour earlier. We held that the evidence raised a fact issue whether Naylor acted with intent.57

*130 The temptation is for courts to search for ways to avoid harsh results and recompense injury from an employer’s egregious behavior. But destabilizing the workers’ compensation system is also a harsh result affecting all Texas employers and employees who benefit from it. Based on Reed Tool and consistent with Rodriguez, we hold that for the intentional-tort exception to the exclusive remedy to apply, the employer must believe that its actions are substantially certain to result in a particular injury to a particular employee, not merely highly likely to increase overall risks to employees in the workplace.

E

Finally, the Restatement definition of intent we adopted in Reed Tool requires not only that a substantial certainty of a particular injury to a particular employee exist but also that the employer “believe[ ]” that it does. In another context, we have explained that “[i]ntent is thus measured by a subjective standard, meaning the defendant must have actually desired or intended to create the [injury] or must have actually known or believed that the [injury] would result.”58 Of course, the employer need not admit to believing that his actions were substantially certain to result in injury to an employee. In Rodriguez, for example, there was no direct evidence that Naylor was substantially certain a truck tire would blow, injuring Rodriguez. But knowing the condition of the tires, knowing that one had already blown, and knowing that Rodriguez needed to be followed to get a new tire was, we concluded, evidence to raise a fact issue.

III

We turn, then, to whether there is evidence that Mo-Vac believed it was substantially certain Escobedo would fall asleep from overwork while driving the night of his accident.

Plaintiff argues that the testimony in Garza’s affidavit that Mo-Vac intentionally demanded that its drivers work illegally long hours and falsify sleep records is sufficient to raise a fact issue as to whether Mo-Vac’s intentional acts caused Escobedo’s death. Mo-Vac argues that even if it knew it was substantially certain that one of its drivers would crash somewhere, someday, that is insufficient. Plaintiff must produce evidence that raises a fact issue as to whether Escobedo’s death was caused by Mo-Vac’s intentional acts or omissions as we have interpreted intent under the intentional-injury exception.

Plaintiff’s evidence fails to raise a fact issue as to whether Escobedo’s accident was substantially certain. Substantial certainty will always be hard to quantify, and because hindsight is 20/20 the assessment is almost unavoidably skewed when the consequence is dire. Our caselaw requires the defendant to know that specific consequences are substantially certain to result from the defendant’s conduct to prevent the intentional-injury exception from devolving into a standard of exceptionally egregious gross negligence.

Garza’s affidavit indicates that Mo-Vac intended its drivers to work more hours in order to turn more profit, but that does not indicate that Mo-Vac intended a driver be killed on the job. Notably, Garza’s affidavit speaks to Mo-Vac’s practices and drivers in a general sense and provides no evidence that Escobedo’s crash was substantially certain. Mo-Vac may have known that there was an ascertainable statistical chance that some of its drivers would be injured over some period of time and that the number of hours its drivers worked would impact that chance. But this evidence *131 does not indicate that Mo-Vac intended a driver be killed on the job or that Escobedo’s crash due to his grueling schedule was substantially certain.59

In workers’ compensation cases, it is not enough to show that all the defendant’s employees were at risk all the time due to overall dangerous job conditions, thus rendering any injury sustained inevitable. As the third Restatement explains, substantial certainty is not established when the identity of potential victims is vague, the time frame involved expansive, and the causal chain connecting conduct and harm relatively attenuated. Here, Escobedo was one of 30 drivers at Mo-Vac’s Dilley terminal and one of an unknown total of Mo-Vac drivers. Even if the Dilley number is the relevant number and that number constitutes a “small class of potential victims within a localized area”, which we do not suggest, Plaintiff’s evidence does not narrow the time frame at all but leaves it impermissibly indefinite. Moreover, the causal sequence the evidence establishes is too attenuated, more akin to the recipe for eventual disaster in Reed Tool60 than the direct causal chain in Rodriguez.61

Likewise, Plaintiff’s evidence fails to raise a fact issue that Mo-Vac subjectively believed Escobedo’s death was substantially certain to occur. As proof of Mo-Vac’s alleged belief, Plaintiff relies on the operations manager’s statement that “we will cross that bridge when we come to it” when confronted with Garza’s warnings that a driver would get killed. If anything, the operations manager’s statement demonstrates Mo-Vac’s awareness that a crash was only possible, not that Mo-Vac believed a crash was substantially certain.62 Indeed, the record reflects that other Mo-Vac drivers had worked significantly longer hours than Escobedo without incident, meaning Mo-Vac had no indication that Escobedo’s crash was substantially certain to occur. Garza himself testified that he was too busy to monitor any individual driver’s hours, including Escobedo’s and that he was on vacation at the time of Escobedo’s crash. Further, federal and state truck driving regulations did not count “off duty waiting” time at the site against a driver’s maximum hours, and Mo-Vac could pay the driver even if the driver was resting. In the two days before Escobedo’s accident, he logged 22.5 hours of “off duty waiting” time, during which he could have been sleeping. Thus, relying only on the total hours Escobedo logged in the days leading up to his accident may paint a misleading picture of his schedule. In sum, Plaintiff’s evidence merely shows Mo-Vac’s awareness of the commonsense notion that fatigued drivers are more likely to be involved in a crash than well-rested drivers.63

*132 Plaintiff also cites Garza’s claim that Mo-Vac “intentionally” placed drivers in a situation that was “substantially certain” to injure or kill a driver. Though this statement parrots the language of the substantial-certainty test, the affidavit’s claims, however troubling they may be, do not provide any specific evidence that Mo-Vac believed that Escobedo’s accident was substantially certain.

In light of this evidence, we hold that Plaintiff failed to raise a fact issue on the applicability of the intentional-injury exception to the exclusive-remedy provision of the Act.

* * * * *

We hold that Plaintiff’s evidence does not raise a fact issue under the intentional-injury exception; thus, her claims are barred by the exclusive-remedy provision of the Act. Accordingly, we reverse the judgment of the court of appeals on her survival action and render judgment for Mo-Vac.

Justice Guzman filed a concurring opinion.

Justice Lehrmann did not participate in the decision.

Justice Guzman, concurring.

A hardworking Texan died alone on the side of a highway in a foreseeable accident that likely would not have occurred but for his employer’s intentional disregard of laws enacted to protect workers and the public. Though precedent compels me to concur in the Court’s conclusion that the Texas Workers’ Compensation Act provides the exclusive remedy for the Escobedo family’s heart-wrenching loss, I write separately to urge the Legislature to align the Act with Texas’s wrongful-death statute by extending the Act’s exemplary-damages exception to parents who have lost a child, like the Escobedo family.1

When an employee dies because of an employer’s gross negligence or intentional acts or omissions, section 408.001(b) of the Workers’ Compensation Act authorizes certain family members to recover exemplary damages.2 If Fabian Escobedo had been a husband or father when he died on the job, his employer, Mo-Vac Service Company, would be accountable under section 408.001(b) for the conduct that likely resulted in his untimely death. But the exemplary-damages remedy in section 408.001(b) is unavailable not because the alleged conduct does not rise to the level of gross negligence but because Fabian had no wife or child to grieve him. By treating some employees as more expendable than others—even when the workplace conditions are the same—section 408.001(b)’s deterrent effect is weakened, and public safety is imperiled. Employers who intentionally, willfully, and repeatedly ignore, thwart, and evade workplace laws should not escape responsibility when the foreseeable consequences of doing so materialize. Section 408.001(b) of the Act imposes consequences for such conduct but leaves a gap that endangers workers and the public. Only the Legislature is empowered to rectify the disparity section 408.001(b) creates.

*133 I.

The Texas Workers’ Compensation Act “provides reciprocal benefits to subscribing employers and their employees.”3 The Act’s overarching purpose is “to provide employees with certainty that their medical bills and lost wages will be covered if they are injured.”4 The Act’s no-fault guarantee offers peace of mind to employees, but in exchange, subscribing employers reap a substantial benefit: the Act bars employees from seeking tort remedies by making workers’ compensation benefits the exclusive remedy for death or injury sustained in the course and scope of employment.5

When an employer is at fault in bringing about an employee’s injury, the exclusive-remedy bar may seem harsh, but it is an integral part of a comprehensive legislative scheme.6 By limiting an injured employee’s right to bring a cause of action against an employer in exchange for guaranteed benefits, the Legislature struck a carefully considered balance: assured compensation for workplace injuries without the uncertainty and expense of litigating responsibility.7 But because the Act focuses on injuries that are broadly categorized as “accidental,” we have long recognized that the Texas Constitution prohibits application of the exclusive-remedy bar to intentional injuries.8

In 1916, just three years after the Legislature enacted the Workers’ Compensation Act, we held “the Legislature is without the power to deny the citizen the right to resort to the courts for the redress of any intentional injury to his person by another.”9 Because “[t]his cause of action is guaranteed to the employee by the Texas Constitution and cannot be taken away by the Legislature,”10 the Workers’ Compensation Act’s exclusive-remedy provision does not bar a suit for intentional injuries.11 Correspondingly, when an employee dies from an intentionally inflicted on-the-job injury, the Act does not bar the decedent’s estate from pursuing a cause of action against the employer.12 As the Court observes, the intentional-injury exception is exceptionally narrow and has *134 never been codified.13

Over the years, the exception’s contours have been shaded through its application to specific facts. For example, we have explained that even when an employee’s injury is “caused by [the] willful negligence or willful gross negligence” of her employer, the employer’s actions do not give rise to an intentional-injury claim for purposes of the exception.14 We have also held that “the intentional failure to furnish a safe place to work does not rise to the level of intentional injury except when the employer believes his conduct is substantially certain to cause the injury.”15 Adding to that, we have recognized myriad other scenarios that would not support a claim under the intentional-injury exception: (1) “the intentional modification or removal of safety controls or guards”; (2) “[t]he intentional violation of a safety regulation”; (3) “the intentional failure to train an employee to perform a dangerous task”; or (4) “[r]equiring an employee to work long hours.”16 Though any of this conduct could properly be categorized as “gross, wanton, willful, deliberate, intentional, reckless, culpable, or malicious negligence,” it is not the equivalent of an intentionally inflicted injury protected by the Texas Constitution.17

In keeping with a constrained view of the intentional-injury exception, the Court’s opinion today refines the standard and holds that the exception applies only when the employer “believe[s] that its actions are substantially certain to result in a particular injury to a particular employee, not merely highly likely to increase overall risks to employees in the workplace.”18 To my mind, the “particular employee” addition to the intentional-injury standard is an unduly rigid gloss that is unnecessary to resolve the dispute in this case, and I cannot join the Court in adopting it. I nonetheless agree the standard of proof in intentional-injury cases must remain high “to prevent the intentional-injury exception from devolving into a standard of exceptionally egregious gross negligence.”19 Consistent with a standard that requires more than egregious gross negligence, I agree with the Court that the record bears no evidence that “Mo-Vac intended a driver be killed on the job or that Escobedo’s crash due to his grueling schedule was substantially certain.”20

However, denying the Escobedo family the opportunity to pursue a cause of action against Mo-Vac reveals an inequity in the workers’ compensation scheme that imperils workers and threatens the welfare of the public at large. Mo-Vac’s alleged behavior in causing or contributing to Fabian’s death shocks the conscience by demonstrating willful disregard for public and employee safety. Mo-Vac, however, will not be held to answer for its intentional conduct because of an incongruity between the beneficiaries who may recover exemplary damages for intentional and grossly negligent conduct under the wrongful-death statute and those who may recover such damages for the same conduct under the workers’ compensation statute.

II.

A.

The Workers’ Compensation Act, from its inception, has included an exception to *135 the exclusive-remedy bar that is both broader and narrower than the intentional-injury exception under the Texas Constitution.21 What is now codified as section 408.001(b) makes the Act’s exclusive-remedy provision in section 408.001(a) inapplicable to intentional and grossly negligent conduct that results in an employee’s death. But even though Fabian’s parents, San Juanita and Primitivo Escobedo, are entitled to seek exemplary damages as statutory beneficiaries under the Texas Wrongful Death Act, their claims for the same outrageous conduct are not covered by the exclusive-remedy exception in section 408.001(b) of the Workers’ Compensation Act and are therefore barred by section 408.001(a).22

After Fabian passed away, his parents filed a wrongful-death suit against Mo-Vac.23 Under the Wrongful Death Act, parents of a decedent are authorized to recover exemplary damages “[w]hen the death is caused by the wilful act or omission or gross negligence of the defendant[.]”24 The Workers’ Compensation Act similarly permits recovery of exemplary damages when death is “caused by an intentional act or omission of the employer or by the employer’s gross negligence,” but unlike the wrongful-death statute, only “the surviving spouse or heirs of the [decedent’s] body” may invoke the exemplary-damages exception to the exclusive-remedy provision.25 Because the Escobedos do not satisfy section 408.001(b)’s familial-relationship requirement, their wrongful-death claims were dismissed.

As currently enacted, the Workers’ Compensation Act relieves employers of accountability for grossly negligent conduct simply because an employee’s survivors do not fit into the narrow category of familial relationships authorized to pursue an exemplary-damages claim under section 408.001(b).26 Employers should not avoid the consequences of patently dangerous conduct merely because the deceased employee was unmarried and childless. Categorizing employees based on marital and parental status neuters the effectiveness of exemplary damages as a deterrent. No one is safe if strong disincentives for gross indifference to safety standards are lacking. Section 408.001(b)’s spouse-or-child limitation highlights where the statutory scheme falls short in deterring wrongful conduct.27

B.

If the Escobedos had been empowered to pursue exemplary damages based on Mo-Vac’s gross negligence, the record bears evidence to support that claim. For purposes of section 408.001(b), gross negligence involves objective and subjective elements: *136 (1) the employer’s conduct “when viewed objectively from the standpoint of the actor at the time of its occurrence involve[d] an extreme degree of risk, considering the probability and magnitude of the potential harm to” its employees; and (2) the employer “ha[d] actual, subjective awareness of the risk involved, but nevertheless proceed[ed] with conscious indifference to the rights, safety, or welfare of” its employees.28

With regard to the first element, Urbano Garza’s affidavit testimony paints a disturbing picture that Mo-Vac was objectively aware that forcing its drivers to work long, grueling hours created an “extreme risk” that one of its drivers would suffer severe injury or even death in the course and scope of employment.29 Mr. Garza provided uncontroverted testimony that Mo-Vac instructed its drivers to falsify their driving records. In other words, Mo-Vac coerced workers who were under economic duress to flat-out lie. The falsified records allowed Mo-Vac’s drivers to work longer hours in direct violation of government-imposed safety rules enacted to protect not only Mo-Vac’s drivers, but everyone using a public roadway. And even more alarming, Mo-Vac specifically trained its drivers to alter their driving logs to create the appearance of compliance with legally mandated safety standards. Mr. Garza estimated that falsification of Mo-Vac’s driving logs resulted in drivers working “19 to 24 hours straight–day after day.” And strikingly, the record indicates that in the eight days leading up to his death, Fabian Escobedo worked a total of 137 hours, averaging more than 17 hours of work per day. Cumulatively, this evidence objectively establishes Mo-Vac knew that requiring its drivers to operate semi-trucks with limited sleep—and in direct violation of safety standards—created “an extreme degree of risk.”30

Similarly, Mr. Garza’s testimony shows Mo-Vac subjectively “knew about the risk,” yet its actions “demonstrated indifference to the consequences.”31 Mr. Garza repeatedly confronted Mo-Vac management about the excessive hours Mo-Vac drivers spent on the road, noting such practices were dangerous and violated driving regulations. And when such conversations took place, Garza “would get an ‘ear full’ or a verbal reprimand from [his] supervisors about keeping production up at all costs.” Mr. Garza also recounted that he was instructed by Mo-Vac management “to get the numbers up” and “to simply tell the drivers ‘don’t get killed out there.’ ” Notably, when Mr. Garza expressed his fear to Mo-Vac management “that one of [Mo-Vac’s] drivers was going to get killed because of [the company’s] insistence on unreasonable driving hours,” management responded: “[W]e will cross that bridge when we come to it.” Garza’s affidavit leaves little doubt that management had “actual, subjective awareness of the risk” flowing from its conduct “but nevertheless proceed[ed] with conscious indifference to the rights, safety, or welfare of” its employees.32

*137 While the record bears no evidence of “intent” as we have narrowly defined the intentional-injury exception under the Texas Constitution,33 at a minimum, there is some evidence of extreme gross negligence. Even so, Fabian’s parents have no recourse against Mo-Vac for their loss because, unlike the wrongful-death statute, the workers’ compensation scheme treats similarly situated workers differently and values their lives differently based on who survives them. If the statutes were parallel, San Juanita and Primitivo’s claims against Mo-Vac would be viable, and the exemplary-damages provision in the Workers’ Compensation Act would have more force in deterring the dangerous conduct that resulted in their son’s death.

* * * * *

In a perfect world, employers would do the right thing simply because it is the right thing to do. But we don’t live in a perfect world. We live in a world that requires laws, regulations, and disincentives to help ensure employers don’t do the wrong thing. Without meaningful consequences for engaging in prohibited conduct, laws are not effective. On that score, the Workers’ Compensation Act has a loophole that unwittingly permits employers to engage, with impunity, in unsafe practices. I believe the tragic circumstances presented here make a strong case for aligning the Workers’ Compensation Act with the Wrongful Death Act, and I call on the Legislature to do so.

Footnotes

1

TEX. LAB. CODE § 408.001(a) (“Recovery of workers’ compensation benefits is the exclusive remedy of an employee covered by workers’ compensation insurance coverage or a legal beneficiary against the employer or an agent or employee of the employer for the death of or a work-related injury sustained by the employee.”). An exception in § 408.001(b) for certain wrongful death actions is not involved in this case.

2

TEX. CONST. art. I, § 13 (“All courts shall be open, and every person for an injury done him, in his lands, goods, person or reputation, shall have remedy by due course of law.”); Middleton v. Tex. Power & Light Co., 108 Tex. 96, 185 S.W. 556, 560 (1916) (“It is ... not to be doubted that the Legislature is without the power to deny the citizen the right to resort to the courts for the redress of any intentional injury to his person by another. Such a cause of action may be said to be protected by [Article I, § 13 of] the Constitution and could not be taken away; nor could the use of the courts for its enforcement be destroyed.”).

3

The current Act was adopted in 1993. Wausau Underwriters Ins. Co. v. Wedel, 557 S.W.3d 554, 562 (Tex. 2018). Three years later, in Medina v. Herrera, 927 S.W.2d 597, 600 (Tex. 1996), we noted that “[t]here is no express provision in either [the current Act] or the former act expressly excluding coverage for an injury resulting from an employer’s intentional tort”, but we concluded that the current Act “embodies the rule of Middleton and its progeny.”

4

Reed Tool Co. v. Copelin, 689 S.W.2d 404, 406 (Tex. 1985) (quoting RESTATEMENT (SECOND) OF TORTS § 8A (1965)).

5

See RESTATEMENT (THIRD) OF TORTS: PHYS. & EMOT. HARM § 1 cmt. a (2010).

6

592 S.W.3d 467 (Tex. App.—Corpus Christi–Edinburg 2018).

7

See TEX. CIV. PRAC. & REM. CODE § 71.021(b) (“A personal injury action survives to and in favor of the heirs, legal representatives, and estate of the injured person.”). Escobedo’s parents, Primitivo and San Juanita Escobedo, and his sister and estate representative, Martha Escobedo, sued Mo-Vac for wrongful death and breach of Escobedo’s employment agreement. Section 408.001(b) of the Act excepts from its exclusive remedy an action for “recovery of exemplary damages by the surviving spouse or heirs of the body of a deceased employee whose death was caused by an intentional act or omission of the employer or by the employer’s gross negligence.” The Escobedos are not the decedent’s surviving spouse or heirs of his body and thus lack standing to sue under that provision. The trial court granted summary judgment for Mo-Vac on those claims, and the court of appeals affirmed. The Escobedos have not complained of that ruling here.

8

Reed Tool, 689 S.W.2d at 406 (quoting RESTATEMENT (SECOND) OF TORTS § 8A).

9

A driver’s total number of hours is not necessarily commensurate with the time the driver spent on the road driving. In 2012, federal and state truck driving regulations allowed companies to pay drivers and bill customers for “off duty waiting” time in line on the oilfield, which did not count against drivers’ maximum hours. Mo-Vac introduced testimony that drivers often slept or rested while waiting on site. In the two days before Escobedo’s accident, he logged 22.5 hours of “off duty” or “off duty waiting” time.

10

Garza admitted that though he was Escobedo’s terminal manager at the time of his death, “I ... was on personal leave vacation at the time of his death.” Nevertheless, he added, he was “familiar with the accident and its cause ... [,] was involved in the company’s (limited) investigation of the crash and its cause, and ... was intimately familiar with the company’s driving, overtime, rest, and dispatch policies at the time of the crash.”

11

Mo-Vac objected to much of Garza’s affidavit as conclusory and hearsay, but for purposes of our analysis, we take it as admissible and true.

12

592 S.W.3d 467, 478 (Tex. App.—Corpus Christi–Edinburg 2018).

13

Kroger Co. v. Keng, 23 S.W.3d 347, 349 (Tex. 2000).

14

TIC Energy & Chem., Inc. v. Martin, 498 S.W.3d 68, 72 (Tex. 2016).

15

Kroger Co., 23 S.W.3d at 349.

16

TIC Energy, 498 S.W.3d at 72–73.

17

SeaBright Ins. Co. v. Lopez, 465 S.W.3d 637, 642 (Tex. 2015) (quoting Kroger Co., 23 S.W.3d at 350).

18

108 Tex. 96, 185 S.W. 556, 559 (1916).

19

Id.

20

Id. at 560.

21

Id.

22

Id.

23

TEX. CONST. art. XVI, § 26.

24

Act of Mar. 29, 1913, 33d Leg., R.S., ch. 179, § 5, 1913 Tex. Gen. Laws 429, 430. The exception is now codified as § 408.001(b) of the Act. As explained in footnote 7, Plaintiff is ineligible to sue under that provision.

25

689 S.W.2d 404, 407 (Tex. 1985).

26

Medina v. Herrera, 927 S.W.2d 597, 600 (Tex. 1996).

27

Id.

28

Reed Tool, 689 S.W.2d at 406.

29

Id. (quoting RESTATEMENT (SECOND) OF TORTS § 8A (1965)).

30

Id.

31

Id. (quoting 2A A. LARSON, THE LAW OF WORKER’S COMPENSATION § 68.13 (1983)).

32

Id. at 407.

33

Id.

34

Id. (quoting 2A A. LARSON, THE LAW OF WORKER’S COMPENSATION § 68.13 (1982)).

35

Id.

36

Id. at 408.

37

Copelin v. Reed Tool Co., 679 S.W.2d 605, 607 (Tex. App.—Houston [1st Dist.] 1984), rev’d, 689 S.W.2d 404, 408 (Tex. 1985).

38

Reed Tool, 689 S.W.2d at 408.

39

RESTATEMENT (FIRST) OF TORTS § 13 (1934).

40

Id.

41

Id. cmt. d (emphasis added).

42

RESTATEMENT (SECOND) OF TORTS § 8A (1965).

43

Id. cmt. b.

44

RESTATEMENT (THIRD) OF TORTS: PHYS. & EMOT. HARM § 1 (2010).

45

See Reed Tool Co. v. Copelin, 689 S.W.2d 404, 406–407 (Tex. 1985) (intentional conduct that only sets the stage for an accidental injury is insufficient); see also Crosstex N. Tex. Pipeline, L.P. v. Gardiner, 505 S.W.3d 580, 605 (Tex. 2016) (“[T]o prove an intentional nuisance, the evidence must establish that the defendant intentionally caused the interference that constitutes the nuisance, not just that the defendant intentionally engaged in the conduct that caused the interference.”).

46

RESTATEMENT (THIRD) OF TORTS: PHYS. & EMOT. HARM § 1 cmt. a. The criminal law must make a similar choice in determining the culpability standard for certain crimes. For example, the Model Penal Code generally “downplays the concept of intent” in favor of the dual standards of “purposely” and “knowingly”. Id. (citing MODEL PENAL CODE § 2.02(2)(a)–(b) (1985)). For many crimes, either mens rea is sufficient—e.g., murder—but others are not satisfied by mere knowledge and require purpose—e.g., arson. Id. (citing MODEL PENAL CODE §§ 210.2, 220.1).

47

Id. cmt. e.

48

Reed Tool, 689 S.W.2d at 408.

49

Id. at 407.

50

Id.

51

Id. at 406.

52

RESTATEMENT (THIRD) OF TORTS: PHYS. & EMOT. HARM § 1 cmt. a (“Some courts say that to prove an intentional tort for purposes of displacing the workers’-compensation exclusivity rule, the plaintiff must prove the employer’s ‘specific’ or ‘actual’ intent to bring about an employee injury. Yet the traditional criminal-law concept of ‘specific intent’ is one that the Model Penal Code omits, finding it confusing and unhelpful. Moreover, given the particular issue raised by the worker injury cases, using the terminology of general versus specific intent is neither evocative nor illuminating.”).

53

The second Restatement uses a bomb hypothetical to illustrate the substantial-certainty test for intent. RESTATEMENT (SECOND) OF TORTS § 8A cmt. b, illus. 1 (1965) (“A throws a bomb into B’s office for the purpose of killing B. A knows that C, B’s stenographer, is in the office. A has no desire to injure C, but knows that his act is substantially certain to do so. C is injured by the explosion. A is subject to liability to C for an intentional tort.”). We think the better category for this example is purpose because the actor deliberately intended the harmful consequence to those present in the room.

54

763 S.W.2d 411, 413 (Tex. 1989).

55

Id. at 412.

56

Id. at 413.

57

Id.

58

Crosstex N. Tex. Pipeline, L.P. v. Gardiner, 505 S.W.3d 580, 605 (Tex. 2016).

59

For this reason, Plaintiff’s brake fluid analogy misses the mark. Plaintiff likens Mo-Vac’s policies to telling the mechanic to stop refilling the hydraulic systems in its trucks to save money. Unlike driving a truck with no brake fluid, which must fail at a certain point in time like the bald tires in Rodriguez, the risks attendant to working long hours are constant every day on every route, indefinitely.

60

Reed Tool Co. v. Copelin, 689 S.W.2d 404, 405 (Tex. 1985) (employee’s injury was not substantially certain where employer required employees to work long hours and operate dangerous and defective machinery without proper training).

61

Rodriguez, 763 S.W.2d at 413 (evidence that employer knew condition of tires but required employee to continue driving truck despite one tire blowout raised fact issue under substantial-certainty test).

62

See cross that bridge when one comes to it, MERRIAM-WEBSTER ONLINE (2020) (defining the idiom as “to not worry about a possible problem until it actually happens”).

63

See State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d 374, 378 (Tex. 1993) (substantial certainty is more than “a foreseeable risk which a reasonable person would avoid” (citation omitted)).

1

See TEX. CIV. PRAC. & REM. CODE § 71.004 (Wrongful Death Act’s exemplary-damages provision); TEX. LABOR CODE § 408.001(b) (Workers’ Compensation Act’s exemplary-damages provision).

2

See TEX. LABOR CODE § 408.001(b) (“This section does not prohibit the recovery of exemplary damages by the surviving spouse or heirs of the body of a deceased employee whose death was caused by an intentional act or omission of the employer or by the employer’s gross negligence.”).

3

TIC Energy & Chem., Inc. v. Martin, 498 S.W.3d 68, 72 (Tex. 2016).

4

HCBeck, Ltd. v. Rice, 284 S.W.3d 349, 350 (Tex. 2009).

5

TEX. LABOR CODE § 408.001(a); Martin, 498 S.W.3d at 72-73; see Castleberry v. Goolsby Bldg. Corp., 617 S.W.2d 665, 666 (Tex. 1981).

6

Tex. Workers’ Comp. Comm’n v. Garcia, 893 S.W.2d 504, 521 (Tex. 1995) (“In comparison, the Act—carrying forward the general scheme of the former act—provides benefits to injured workers without the necessity of proving negligence and without regard to the employer’s potential defenses. In exchange, the benefits are more limited than the actual damages recoverable at common law.”).

7

Id. at 511 (“Employees injured in the course and scope of employment could recover compensation without proving fault by the employer and without regard to their or their coworkers’ negligence.”); Reed Tool Co. v. Copelin, 689 S.W.2d 404, 407 (Tex. 1985) (“The system balances the advantage to employers of immunity from negligence and potentially larger recovery in common law actions against the advantage to employees of relatively swift and certain compensation without proof of fault.”).

8

Middleton v. Tex. Power & Light Co., 108 Tex. 96, 185 S.W. 556, 560 (1916); see TEX. CONST. ART I, § 13 (“All courts shall be open, and every person for an injury done him, in his lands, goods, person or reputation, shall have remedy by due course of law.”).

9

Middleton, 185 S.W. at 560.

10

Castleberry, 617 S.W.2d at 666.

11

Middleton, 185 S.W. at 560.

12

Castleberry, 617 S.W.2d at 666.

13

Ante at 120–21, 128–29, 130–31.

14

Castleberry, 617 S.W.2d at 666.

15

Reed Tool Co. v. Copelin, 689 S.W.2d 404, 407 (Tex. 1985).

16

Id. at 406-07.

17

Id. at 406.

18

Ante at 129–30.

19

Id. at 130–31.

20

Id.

21

Middleton v. Tex. Power & Light Co., 108 Tex. 96, 185 S.W. 556, 558 (1916) (noting the Act’s exception for “exemplary damages [that] may be recovered in an ordinary suit by the surviving husband, wife and heirs of any deceased employee whose death is caused by homicide through the wilful act or omission or gross negligence of his employer”).

22

Compare TEX. CIV. PRAC. & REM. CODE § 71.004 (parents of the deceased may bring a wrongful-death action), with TEX. LABOR CODE § 408.001(b) (only the decedent’s surviving spouse and heirs may recover exemplary damages).

23

TEX. CIV. PRAC. & REM. CODE §§ 71.001–.012.

24

Id. at §§ 71.004 (“An action to recover damages as provided by this subchapter is for the exclusive benefit of the surviving spouse, children, and parents of the deceased.”), .009 (exemplary damages authorized for intentional or grossly negligent conduct).

25

TEX. LABOR CODE § 408.001(b).

26

Id.

27

See id.

28

TEX. CIV. PRAC. & REM. CODE § 41.001(11); see TEX. LABOR CODE § 408.001(c) (“In this section, ‘gross negligence’ has the meaning assigned by Section 41.001, Civil Practice and Remedies Code.”).

29

See U-Haul Int’l, Inc. v. Waldrip, 380 S.W.3d 118, 137 (Tex. 2012) (“Under the objective component, ‘extreme risk’ is not a remote possibility or even a high probability of minor harm, but rather the likelihood of the plaintiff’s serious injury.”).

30

TEX. CIV. PRAC. & REM. CODE § 41.001(11)(A).

31

Waldrip, 380 S.W.3d at 137.

32

TEX. CIV. PRAC. & REM. CODE § 41.001(11)(B).

33

Ante at 134–35, 130–31.

Supreme Court of Texas.

Conway WAAK, Jr. and Marlene Waak d/b/a Carmine Charolais Ranch, and Carmine Charolais Ranch, Petitioners

v.

Raul Amparo Zuniga RODRIGUEZ and Ana Maria Ortiz Martinez, Individually and as Personal Representatives and Heirs of the Estate of Raul Amparo Zuniga Ortiz, Jr.; and Juana Guadalupe Martinez, as Next Friend of Sebastian Zuniga and Wendy Zuniga, et al., Respondents

No. 19-0167

|

Argued January 30, 2020

|

Opinion delivered: June 12, 2020

*104 ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE FIRST DISTRICT OF TEXAS

Opinion

Chief Justice Hecht delivered the opinion of the Court, in which Justice Green, Justice Guzman, Justice Lehrmann, Justice Devine, and Justice Busby joined.

The Texas Farm Animal Activity Act1 limits liability for injury to “a participant in a farm animal activity or livestock show” that results from an “inherent risk” of such activities,2 “whether the person is an amateur or professional or ... pays ... or participates ... for free”.3 A divided court of appeals held that the Act does not apply to ranchers and ranch hands.4 We agree and affirm the court’s judgment.

I

For many years, petitioners Conway and Marlene Waak have bred Charolais cattle5 on their 760-acre Carmine Charolais Ranch in Fayette County west of Brenham. *105 In 2005, they hired Raul Zuniga part-time to work the cattle, landscape, and cut hay. Three years later, Zuniga began working for the Waaks full-time, living on the ranch in a mobile home he was buying from them.

At first, Conway trained Zuniga how to work and cut cattle, observing to see that he did the work properly. Zuniga had no set work schedule; instead, the Waaks gave him various tasks to perform each day. He often worked cattle alone while Conway worked at his oilfield consulting business.

When cattle had to be moved from place to place on the ranch, they were herded into a pen, moved through a chute onto a trailer, hauled to the new location, and unloaded. Conway showed Zuniga what equipment and strategies to use to move the cattle and how to “punch them up”—prod them to move through the chute leading them onto the trailer.

In October 2013, Conway asked Zuniga, 33, to move 20 head of cattle from one end of the ranch to the other, something Zuniga had done many times. The Waaks then left the ranch to run errands in Brenham. After moving most of the cattle, Zuniga called the Waaks to confirm that he should move the last three remaining in the pen in the barn: a 2,000 pound bull, a cow, and the cow’s calf. They replied that he should. When the Waaks returned home, they found Zuniga lying dead behind the barn. The bull and the two cows were still in the pen. The medical examiner determined that Zuniga’s cause of death was “blunt force and crush injuries” that were “severe enough to have come from extensive force like that of a large animal trampling the body”.

Respondents, Zuniga’s parents and surviving children, sued the Waaks, nonsubscribers under the Texas Workers’ Compensation Act, on wrongful death and survival claims.6 Plaintiffs allege that the bull killed Zuniga and that the Waaks were negligent in several respects, including failing to provide a safe workplace, failing to train Zuniga and warn him of the dangers of working cattle, and failing to supervise him. The trial court granted summary judgment for the Waaks after concluding that the Farm Animal Activity Act (the Farm Animal Act or the Act) barred the plaintiffs’ claims. The court of appeals reversed, holding that Zuniga “was not a participant in a farm animal activity” for whose injuries and death the Act limits liability.7

We granted the Waaks’ petition for review.

II

The Waaks argue that the Farm Animal Act applies by its plain terms to ranching—working farm animals for a living or for profit.

A

The Farm Animal Act is a somewhat expanded revision of the Equine Activity Act (the Equine Act) passed in 1995.8 To interpret the Farm Animal Act, we must *106 first examine its history.9

The Equine Act was a product of a national movement spurred by the horse industry to protect itself from liability for injuries due to the inherent risks of being around the animals that reasonable people should expect.10 Those common expectations had always completely protected horse owners from negligence liability through the absolute common law defenses of contributory negligence and volenti non fit injuria—voluntary assumption of the risk. Those defenses precluded a person from recovering damages for injuries sustained in voluntarily exposing himself to the known risks of being around a horse. But as those absolute defenses were gradually replaced in state after state by comparative negligence, which reduces liability only based on a plaintiff’s share in the responsibility for injury,11 the horse industry’s liability, together with the costs of litigation, naturally increased. The industry’s proposed fix was a uniform act to be adopted state by state limiting liability for certain horse-related activities. In the five years before Texas enacted its version of the statute, more than 25 states had already beaten us to the punch.12

The Equine Act provided that “any person, including an equine activity sponsor or an equine professional, is not liable for property damage or damages arising from the personal injury or death of a participant ... [that] results from the dangers or conditions that are an inherent risk of equine activity”.13 Included among the statute’s list of inherent risks was “the propensity of an equine animal to behave in ways that may result in personal injury or death to a person on or around it”, as well as “the unpredictability of an equine animal’s reaction to sound, a sudden movement, or an unfamiliar object, person, or other animal”.14

An “equine activity sponsor” shielded from liability was defined in general terms as “a person or group who sponsors, organizes, or provides the facilities for an equine activity ... without regard to whether the person operates for profit”, with a list of inclusive examples: “equine facilities for a pony club, 4-H club, hunt club, riding club, therapeutic riding program, or high school or college class, program, or activity”.15 The definition also included “an operator of, instructor at, or promoter for ... facilities ... at which an equine activity is held” but again added an inclusive list of examples of the facilities intended: “a stable, clubhouse, pony ride *107 string, fair, or arena”.16 A “participant”, whose recovery was limited by the Act, was defined as “a person who engages in an equine activity, without regard to whether the person is an amateur or professional or whether the person pays for the activity or participates in the activity for free.”17

“Equine activity” was defined as including:

• “an equine animal show, fair, competition, performance, or parade” involving “any equine discipline, including dressage, hunter and jumper horse shows, grand prix jumping, three-day events, combined training, driving, pulling, cutting, polo, steeplechasing, English and Western performance riding, endurance trail riding and Western games, and hunting”;18

• “rodeos and single event competitions, including team roping, calf roping, and single steer roping”;19

• “riding, inspecting, or evaluating an equine animal belonging to another”;20

• “training or teaching” and “boarding”;21 and

• “a ride, trip, or hunt that is sponsored by an equine activity sponsor”.22

The Act defined “engag[ing] in an equine activity” as “riding, handling, training, driving, assisting in the medical treatment of, being a passenger on, or assisting a participant or sponsor with an equine animal.”23 The definition specifically included “management of a show” but excluded “being a spectator at an equine activity unless ... in an unauthorized area and in immediate proximity to the equine activity.”24

Notably, as these lengthy excerpts repeatedly demonstrate, the Equine Act described its coverage not in general terms or concepts but with detailed and specific examples. An equine activity might simply have been defined as any activity involving an equine. Instead, the statute defined the two words with a 158-word sentence containing some 40 examples.25 An equine activity is not just a “show, fair, competition, performance, or parade,” but one that involves “any equine discipline,” which is described with 13 examples.26 The definition includes “single event competitions,” but rather than stop there, it adds, “including team roping, calf roping, and single steer roping.”27 An equine activity sponsor provides facilities not just for a club, but *108 for “a pony club, 4-H club, hunt club, [or] riding club”.28

The Equine Act’s prolixity made obvious that it was entirely concerned with equine activities unrelated to ranching—that is, breeding, feeding, and working equine animals as a vocation. In all its scores of examples, there was no hint of any application to ranchers’ and ranch hands’ involvement with horses. The omission must be meaningful.

In the relatively few instances when the Equine Act did speak in general terms, those terms must be read in connection with the statute’s examples. The statute limited the liability of “any person, including an equine activity sponsor or an equine professional”.29 Ordinarily, “including” is a term of enlargement.30 But “any person”, in the abstract, cannot be enlarged upon. Removed from its context, it is universal. To read the phrase as such would make the two examples that follow surplusage, violating the cardinal rule of statutory interpretation that every word of text be given meaning.31 It is like saying, “any person, including John and Mary.” If by “any person” it is meant any person in the world, then it says nothing to specify that John and Mary are included. But the addition has meaning if John and Mary are examples of the persons intended.

The Equine Act defined an “equine activity sponsor” shielded from liability as “a person ... who ... provides the facilities for an equine activity”.32 That describes a rancher with a stable, which is unquestionably a facility for an equine activity. But the examples of facilities that follow the next word, “including”—facilities for various school clubs and programs—show that the statute intended that “sponsor” be someone who provided a facility like those listed, not everyone who provided a facility where an equine could possibly be placed. The Equine Act defined “participant” as “a person who engages in an equine activity,” but the statute then immediately added, “without regard to whether the person is an amateur or professional or whether the person pays for the activity or participates in the activity for free.”33 If the statute meant any person at all, then the four examples listed would be surplusage. They have meaning only if they typify the persons intended as participants.

Not only do the many examples in the Equine Act omit any mention of ranchers and ranch hands, every textual indication shows that they are not covered. The court of appeals came to that conclusion 10 years after the Equine Act was passed in Dodge v. Durdin.34 Today, every state but two—California and Maryland—has a statute limiting liability for equine activities. We are unaware of any that applies to ranching *109 or limits a ranch employee’s recovery for on-the-job injuries caused by horses. Nor are we aware of any reported decision applying an equine statute to ranching. In the 40-year history of equine activity statutes, the Dodge court—the only one to consider the issue of which we have been made aware—held that the Texas Equine Act does not apply to ranching.

B

In 2011, the Legislature broadened the Equine Act in three ways.35 The renamed Farm Animal Act included other farm animals besides equines: bovines, sheep, goats, pigs, hogs, ratites, ostriches, rheas, emus, chicken, and other fowl.36 It was somewhat expanded to cover veterinarians37 and livestock shows.38 And the words “handling, loading, or unloading” were added to the definition of farm animal activity.39

In other respects, the Farm Animal Act did not depart from the Equine Act. The former, like the latter, limits the liability of “any person, including a farm animal activity sponsor [or] farm animal professional,” but then continues with additional examples of a person whose liability is limited: “livestock producer, livestock show participant, or livestock show sponsor”.40 As in the Equine Act, the categories following “including” cannot be read as exclusive, but neither can they be read as meaningless. In both statutes, the examples show the types of persons meant by “any”. Farm animal sponsors, which the Farm Animal Act defines essentially the same way the Equine Act did, are largely event organizers and facilities providers,41 and professionals are trainers and equipment renters.42 The livestock examples relate to “shows”.43 The examples confine the statute’s protections to the context of shows, rides, exhibitions, competitions, and the like. The categories listed as examples do not suggest that ranchers should also be included.

The Farm Animal Act limits liability to or for a “participant”, defined in part as “a person who engages in [a farm animal] activity, without regard to whether the person is an amateur or professional or whether the person pays for the activity or participates in the activity for free”.44 Again, to give any meaning to the listing of four examples—amateur, professional, paying, and for free—they must be read as typical of participants. They describe the kind of people the Act treats as participants. Ranch hands might be said to be experienced or inexperienced, but would not be said to be professional or amateur. On the other hand, horse riders in a show or rodeo, or even on a trail ride or hunt, might certainly be said to be amateur or professional. Ranch hands do not pay to work. It makes no sense to speak of a ranch hand “without regard to whether ... the person pays for the activity”. And ranch hands, though often underpaid, do not ordinarily work for free. The four examples make clear that referring to a *110 ranch hand as a “participant in a farm animal activity” is inconsistent with the Act’s history and context. This is even clearer from the second part of the definition of “participant”, which relates only to livestock shows.45

The Equine Act included “handling” in the long list of examples defining engaging in equine activities.46 The Farm Animal Act added “loading [and] unloading” to the list in the corresponding definition of engaging in farm animal activities47 and added “handling, loading, or unloading” to the list of examples that define farm animal activity.48 But those words obviously have meaning outside the ranching context, and nothing in any of the Legislature’s changes in the Equine Act suggests that by adding those three words it intended to broaden the Farm Animal Act to cover ranching for the first time.

Ranch hands do not work as amateurs or professionals, they certainly do not pay to do their work, and they ordinarily do not work for free. Ranch hands have none of the characteristics the Farm Animal Act lists for “participants”. Ranchers, as such, are not farm animal activity organizers, facilities providers, trainers, equipment renters, and showmen. They have none of the qualities the Act lists for those it protects. Thus, we conclude that the Farm Animal Act does not cover ranchers and ranch hands and that it did not shield the Waaks from liability for their negligence, if any, resulting in Zuniga’s death.

C

The DISSENT’S contrary conclusion requires a reading of the Farm Animal Act that has significant constitutional impediments and cannot reasonably be ascribed to the Legislature. This necessitates an explanation of Texas’ workers’ compensation system.

The workers’ compensation system throughout the country strikes a balance between employers’ and employees’ respective interests in compensating workplace injuries. The employee cannot sue the employer on common law claims, thereby relieving the employer of defending and paying them, but in return, the employer must pay the employee standardized insurance benefits regardless of fault.49 Each pays or receives something, though perhaps more or less than under the common law.

In Texas, an employer can opt out of the system. The Texas Workers’ Compensation Act (WCA)50 “discourages employers from opting out of workers’ compensation insurance by prohibiting a nonsubscriber from asserting that its employee was contributorily negligent, assumed the risk, or that a fellow employee’s negligence caused the employee’s injuries.”51 Thus, the employee of a nonsubscribing employer, though not receiving compensation benefits, has a remedy against the employer in the form of a negligence action. Though the WCA limits the nonsubscribing employer’s defenses, it does not prevent an employer from asserting *111 the liability shield of the Farm Animal Act. A ranch hand accidentally injured on the job by falling, by something falling on him, by equipment, by twisting his back or pulling a muscle—by almost anything—can sue his nonsubscriber employer and recover damages as long as he was not intoxicated.52 But he could not do so if the employer were protected by the Farm Animal Act. If the Act covered ranch hands, then it would operate to deny those employed by nonsubscribers of any remedy whatsoever for their injuries. They would not be entitled to compensation benefits, and they would have no common law cause of action. That is certainly a policy choice the Legislature could make. It could single out ranch hands and deny them, alone of all employees in the state, any right of recovery whatsoever for certain accidental injuries, commonplace in their jobs, while working for nonsubscribing employers. Apart from the constitutional implications of such a decision—such as violations of due process and equal protections guarantees, as well as open courts—nothing in the history of the Texas Equine Act or of similar statutes in almost all other states or in the caselaw interpreting them suggests any intent to deny recovery of damages for injuries from horse activities altogether in a group of cases. Rather, the history of these statutes shows a universal legislative intent, for claims of injury from horses, to return to something like the common law, with its absolute defenses of contributory negligence and assumption of the risk.

It is certainly not our place to make policy decisions that are for the Legislature to make. But it is exclusively our place to determine what policy decisions they have made. The Farm Animal Act can reasonably be interpreted to fulfill its historical and stated intent fully and completely without adding legal injury to physical injury for one small class of ranch hands.

We have confronted a similar situation before. In 1985, the Legislature amended the Motor Vehicle Code to require the use of seat belts and impose criminal penalties for nonuse, while adding that “[u]se or nonuse of a safety belt is not admissible evidence in a civil trial.”53 When Marilyn Glyn-Jones sued on a products liability claim, alleging that her seat belt was defective, defendant Firestone moved for summary judgment, arguing that Glyn-Jones could not prove her case because she could not offer evidence that she had been using her seat belt. The trial court granted the motion. The court of appeals reversed, holding that the statutory provision violated the Open Courts provision of the Texas Constitution. We affirmed without reaching the constitutional issue, holding instead that the statute could not reasonably be interpreted to apply in products liability cases.54 “[T]hat the Legislature would absolve seat belt manufacturers from products liability claims in a subsection of a traffic statute [was] simply too much to believe.”55

* * * * *

The court of appeals correctly concluded that the Farm Animal Act does not apply *112 to ranchers and ranch hands acting as such. Accordingly, the court’s judgment is

Affirmed.

Justice Blacklock filed a dissenting opinion, in which Justice Boyd joined.

Justice Bland did not participate in the decision.

Justice Blacklock, joined by Justice Boyd, dissenting.

As the Court reads the Farm Animal Activities Act, “any person” means only some people. “Farm animal activities” are not covered if they take place on ranches. And not just anybody who engages in a “farm animal activity” is “a person who engages in the activity.” Who decides whether these limitations exist and how far they extend? Not the Legislature, which did not include any of them in the Act’s text. Instead, courts will decide when the statute’s words mean exactly what they say and when they mean something else. The unfortunate result is that people cannot simply read the Act—and others similarly drafted—and know what it means based on its grammar and sentence structure. They must wait to see what the courts make of it.

The Act’s verbiage is at times dense, but it has a firm and definite meaning under normal rules of English grammar. “Any person, including x, y, and z” does not mean “only people who resemble x, y, and z.” There is no way to get from one to the other without making our middle school English teachers recoil in horror. Yet that seems to be how the Court reads the Act. Non-exhaustive lists following words like “including” are common in statutes. These illustrative catalogues, in dependent clauses set off by commas, do not affect the core meaning of a sentence. That does not make them superfluous, and even if it did, the superfluous language cannon is not an excuse to ignore the way the Legislature constructed a sentence. The goal in statutory construction is to understand the meaning of the legislative words “according to the rules of grammar and common usage.” Brazos Elec. Power Coop., Inc. v. Tex. Comm’n on Envtl. Quality, 576 S.W.3d 374, 384 (Tex. 2019). That primary goal should always prevail over secondary interpretive tools like avoiding superfluous verbiage.

The Act limits the liability of “any person,” not particular categories of people, who are sued for injuries to a “participant in a farm animal activity,” as the statute defines that phrase. TEX. CIV. PRAC. & REM. CODE § 87.003. The decedent in this case was “loading [ ] or unloading a farm animal belonging to another” when the accident occurred, which makes him a “participant in a farm animal activity” under the statutorily supplied definitions. Id. § 87.001. Thus, the Act’s liability limitations apply.

If the Legislature wants the Act to have a narrower scope, it can amend the law. We should not attempt to remedy a perceived disconnect between a broadly worded statute and the narrow concerns presumed to have motivated its enactment. That is a legislative function. We should apply the words of the law exactly as written. Doing so in this case requires reversal of the court of appeals’ judgment and remand for consideration of the Act’s exceptions. Because the Court does otherwise, I respectfully dissent.

* * *

Understanding a statute’s meaning begins and ends with the statute’s text. BankDirect Capital Fin., LLC v. Plasma Fab, LLC, 519 S.W.3d 76, 86 (Tex. 2017). When the Legislature defines its terms, “we are bound to apply the statutory definition in deciding the question before us.” *113 Nelson v. Union Equity Co-op. Exch., 548 S.W.2d 352, 355 (Tex. 1977).

Section 87.003 of the Farm Animal Activities Act1 states:

[e]xcept as provided by Section 87.004, any person, including a farm animal activity sponsor, farm animal professional, livestock producer, livestock show participant, or livestock show sponsor, is not liable for property damage or damages arising from the personal injury or death of a participant in a farm animal activity or livestock show if the property damage, injury, or death results from the dangers or conditions that are an inherent risk of a farm animal activity or the showing of an animal on a competitive basis in a livestock show ....

TEX. CIV. PRAC. & REM. CODE § 87.003.

The Act defines “Participant” as, “with respect to a farm animal activity, a person who engages in the activity, without regard to whether the person is an amateur or professional or whether the person pays for the activity or participates in the activity for free.” Id. § 87.001(9)(A). “Engages in a farm animal activity” is defined as

riding, handling, training, driving, loading, unloading, assisting in the medical treatment of, being a passenger on, or assisting a participant or sponsor with a farm animal. The term includes management of a show involving farm animals. The term does not include being a spectator at a farm animal activity unless the spectator is in an unauthorized area and in immediate proximity to the farm animal activity.

Id. § 87.001(1). “Farm animal activity” means:

(A) a farm animal show, fair, competition, performance, rodeo, event, or parade that involves any farm animal;

(B) training or teaching activities involving a farm animal;

(C) boarding a farm animal, including daily care;

(D) riding, inspecting, evaluating, handling, loading, or unloading a farm animal belonging to another, without regard to whether the owner receives monetary consideration or other thing of value for the use of the farm animal or permits a prospective purchaser of the farm animal to ride, inspect, evaluate, handle, load, or unload the farm animal;

(E) informal farm animal activity, including a ride, trip, or hunt that is sponsored by a farm animal activity sponsor;

(F) placing or replacing horseshoes on an equine animal;

(G) examining or administering medical treatment to a farm animal by a veterinarian; or

(H) without regard to whether the participants are compensated, rodeos and single event competitions, including team roping, calf roping, and single steer roping.

Id. § 87.001(3) (emphasis added).

* * *

When the statutory text and its legislatively supplied definitions are applied to *114 the alleged facts of Zuniga’s accident, there is little question the Act’s liability limitations apply. Section 87.003 provides that “any person, including a farm animal activity sponsor, farm animal professional, livestock producer, livestock show participant, or livestock show sponsor, is not liable ....” The sentence’s operative language is “any person ... is not liable.” “[A]ny person” obviously includes the Waaks. The word “including” introduces a dependent clause that does not alter the meaning of the sentence’s operative language. As always, a list following the word “including” is not an exclusive enumeration of the covered categories. See, e.g., Sneed v. Webre, 465 S.W.3d 169, 190 (Tex. 2015); see also Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 132 (2012) (“The verb to include introduces examples, not an exhaustive list.”). Whether or not the Waaks are any of the things mentioned in the list, they are “any person,” so the statute protects them from liability, assuming its other requirements are met.

In addition, Zuniga was a “participant” under the Act, which defines “participant” as, “with respect to a farm animal activity, a person who engages in the activity.” Id. § 87.001(9). That is the sentence’s operative language. It is followed by a comma and a dependent clause: “without regard to whether the person is an amateur or professional or whether the person pays for the activity or participates in the activity for free.” Id. (emphasis added). In English grammar, dependent clauses may be restrictive or non-restrictive.2 Non-restrictive clauses provide additional, nonessential information and are typically set off by commas. If a non-restrictive clause is omitted, the sentence still makes sense. Id. So it is with section 87.001(9). A “participant” is “a person who engages in the [farm animal] activity.” Everything following the comma before “without regard to ....” is a non-restrictive clause that does not change the operative portion of the definition. See id. § 87.001(9).3

“Without regard to” means what it says: “whether the person is an amateur or professional or whether the person pays for the activity or participates in the activity for free” cannot be considered in determining whether a person is a “participant” for purposes of the FAAA. Properly construed, the statute’s operative definition of “participant” is “a person who engages in [a farm animal] activity.” The dependent *115 clause following “without regard to” attempts to make doubly sure courts will not decide that some people who meet the definition are not “participants” (although ironically it seems to have had the opposite effect). Zuniga was a “participant” if he was “engaged in a farm animal activity.” Whether he fits any of the descriptions following the words “without regard to” is irrelevant.

Thus, in determining whether section 87.003 applies, the key question is whether Zuniga was engaged in “farm animal activity” at the time of his death. The Act defines “farm animal activity” to include “riding, inspecting, evaluating, handling, loading, or unloading a farm animal belonging to another.” Id. § 87.001(3)(D). It also defines “engages in a farm animal activity” as “riding, handling, training, driving, loading, [or] unloading ... a farm animal.” Id. § 87.001(1). Under either definition, “handling,” “loading,” or “unloading” a “farm animal” qualifies as a “farm animal activity.” The plaintiffs’ petition alleges Zuniga was killed by a bull “while [he] was moving cattle” belonging to the Waaks. Thus, under the facts as pleaded, Zuniga was engaged in a farm animal activity because he was “handling, loading, or unloading a farm animal belonging to another” when the accident occurred. There is no genuine dispute he was doing so.

The Act’s text does not exclude any category of people who handle, load, or unload farm animals. Contrary to the Court’s holding, the Act contains no exception for ranch work. When a statute’s text is this clear, courts should not use interpretive aides or rules of construction to conjure up the possibility that unspoken exceptions lurk beneath clearly written, broadly phrased text. There is no doubt about what “handling, loading, or unloading a farm animal” means. When the statute says it applies to “a person” who does so, it does not also need to specifically say it covers “an employee” who does so. Employees are persons. Nor does it need to specifically say it applies on ranches, which are in the very business of “handling, loading, or unloading a farm animal.”

The Legislature’s chosen words have only one meaning, and we have no license to look behind those words for hidden exceptions.4 Our job is simply to read the words and apply them. I agree with the Court that the context in which words appear can sometimes contribute to understanding their meaning. TGS–NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432, 441 (Tex. 2011). But context does not change text. Even when looking to context, the task is still to understand the meaning of the words chosen by the Legislature. We may look to context to better understand what the statute’s words mean, but we may not use context to make the words mean something they do not say. Consideration of context is not license to import caveats and restrictions that are not supported by the common, ordinary meaning of the text itself.

The Court cites the superfluous language canon to support its conclusion that “any person” does not include the Waaks. “Any person,” is followed by the word “including” and a lengthy illustrative list. *116 The Court reasons that if “any person” really meant “any person,” the list would serve no purpose, a result which must be avoided. But the superfluous language canon “cannot always be dispositive because ... [s]ometimes drafters do repeat themselves and do include words that add nothing of substance, either out of a flawed sense of style or to engage in the ill-conceived but lamentably common belt-and-suspenders approach.” Scalia & Garner, supra, at 176–77 (emphasis omitted). Moreover, the illustrative list following “any person” is not superfluous. Concerned (not without reason) that courts may not stick strictly to the text, the Legislature often makes doubly sure its meaning is understood by providing non-exhaustive explanatory lists within statutes. This “lamentably common belt-and-suspenders approach” is not a license for courts to depart from a sentence’s objective grammatical meaning in a bid to avoid surplusage. There may be hundreds of such statutory lists in Texas’s code books. If we must depart from normal rules of grammar to give these dependent clauses more work to do, many statutes may unexpectedly require reexamination.

The Court invokes the statutory “context” of the many recreational activities listed in the definition of “farm animal activity” to conclude that “handling, loading, or unloading a farm animal” is only covered if it happens at a recreational activity. But there is no reason to question the common meaning of “handling, loading, or unloading a farm animal” or to resort to contextual analysis to impose limitations the text does not support. True, much of the conduct covered under the definition of “farm animal activity” occurs only at livestock shows or recreational events, not on ranches. But not all of it does. As the court of appeals acknowledged, “farm animal activity” is “defined to include a broad number of activities.” 562 S.W.3d at 577. Indeed, much of the conduct covered under the definitions of “engages in a farm animal activity” and “farm animal activity” is precisely the kind of thing ranch employees do: “riding, inspecting, [and] evaluating” farm animals; “placing or replacing horseshoes”; and “examining or administering medical treatment to a farm animal.” See TEX. CIV. PRAC. & REM. CODE § 87.001(3). The Act’s text covers these everyday animal husbandry activities without regard to where they take place or whether they have anything to do with a livestock show or recreational event. Similarly, the Act applies in the same way to “handling, loading, or unloading a farm animal belonging to another,” whether on ranches or anywhere else. See id.

It would have been very easy to write a statute that applies only at recreational livestock events, a statute that only covers horseshoeing, veterinary treatment, and loading or unloading animals at such events, not on ranches. There are several places in the Act’s overlapping maze of definitions where such a limitation could have been imposed. It was not. Only by focusing on what most of the Act’s examples and illustrations seem concerned with, while discounting the Act’s broadly worded operative language, is the Court able to impose limitations on the Act’s scope that do not appear in its text. The main problem with this approach is that the Act’s broadly worded operative language is in the Act. Words limiting the Act’s scope to recreational livestock events are not in the Act.

Finally, the Court’s focus on the “context” of the statutory language, as opposed to its objective grammatical meaning, risks bleeding over into the fraught realm of purposive statutory interpretation. Courts should not stray from the language of the statute in pursuit of achieving the result judges imagine to be consistent with legislative *117 “purpose.” Focusing on presumed legislative purpose instead of statutory text presents well-known problems. It can lead to results that are unpredictable and easily manipulated. Scalia & Garner, supra, at 18–19.5 It can ignore the reality that statutes may incorporate multiple purposes and compromises reached by a legislature composed of many people. See id. at 21. Most troubling, when a court strays from text and instead endeavors “to produce sensible, desirable results, since that is surely what the legislature must have intended,” courts risk replacing legislative policy choices with their own. Id. at 22, 57.

Again, if the Legislature had wished to write a statute that only covered “farm animal activities” at recreational events and not at ranches, it could easily have done so. Instead, it wrote a much broader statute that protects “any person” against lawsuits by “a person” who “engages” in the activities.6 When the statute is applied as written, it covers this case. Courts should not second-guess that result or plumb the depths of the statute’s “context” for unwritten exceptions to the text’s plain meaning. If a majority of the Legislature thinks the text it enacted is unduly broad, it can change the law.

* * *

The Court expresses concern that if the Act covers this case, farm hands like Zuniga will unfairly lose the benefit of Texas’s workers’ compensation laws. The Court even goes so far as to suggest the Texas Constitution might prohibit the Act from applying to ranch hands. In my view, the Court overstates the impact the Act has on the normal employee-employer relationship. The Act modestly limits the litigation rights of some injured employees. It by no means cuts them off altogether. This is a legislative choice similar to that contained in many other Texas statutes. It is not a constitutional matter.

*118 To begin with, applying the Act to this case does not mean the Waaks necessarily walk. The majority suggests that if the Act applies, the courthouse doors are barred. That is not the case. At the trial court, the Waaks moved for partial summary judgment concerning the applicability of section 87.003, acknowledging that “the parties will still need to try the Act’s potential exceptions to the limitations of liability as set forth in Texas Civil Practice and Remedies Code Section 87.004(2) and (4).” Those exceptions apply when the defendant “did not make a reasonable and prudent effort to determine the ability of the participant to engage safely in the farm animal activity or ... manage the farm animal,” id. § 87.004(2), or committed “an act or omission with wilful or wanton disregard for the safety of the participant and that act or omission caused the injury.” Id. § 87.004(4). The first exception—for failing to ensure the activity can be done safely—could certainly apply in Zuniga’s case and in many others like it. In the context of employee accidents, the Act’s preservation of employer liability for failing to reasonably ensure the employee could do his job safely leaves many—perhaps most—negligence claims viable.

There is nothing remarkable, unusual, or constitutionally suspect about a non-subscribing employer asserting statutory defenses in a case brought by an injured employee under section 406.033 of the Labor Code. In such a case, “it is not a defense that:

(1) the employee was guilty of contributory negligence;

(2) the employee assumed the risk of injury or death; or

(3) the injury or death was caused by the negligence of a fellow employee.”

TEX. LAB. CODE § 406.033(a). Assuming those rules apply to this case, the Waaks cannot raise these common-law defenses. But the Labor Code does not say the Waaks cannot assert the defense provided by section 87.004 of the Farm Animals Activity Act or any other statutory defense. Just as defendants in such cases can assert statutes of limitation, they can also assert any statutory defenses that do not conflict with the Labor Code’s liability rules. In addition to statutes of limitation, the code books are replete with defenses that might be raised by non-subscribing employers in lawsuits over work-related accidents.7 To the extent some fear the availability of these defenses “undermines” the workers’ compensation laws, their beef is with the Legislature, which enacted these generally applicable limitations on liability without making employee vs. employer suits exempt from them.

Here, the plaintiffs might very well have been able to demonstrate that section 87.004’s exceptions apply. But even if the FAAA ultimately protected the Waaks from all liability in this case, that result is within the prerogative of the Legislature, which does not violate the Constitution by limiting litigation over the unpredictable and uncontrollable behavior of livestock.8

*119 * * *

We should stick strictly to the statutory text, even when the result is unexpected or seems unfair. Because Zuniga was a “participant” engaged in a “farm animal activity” at the time of the accident, the Farm Animal Activities Act’s liability limitations apply. I would reverse the judgment of the court of appeals and remand the case to the trial court for consideration of the statutory exceptions in section 87.004. I respectfully dissent.

Footnotes

1

TEX. CIV. PRAC. & REM. CODE §§ 87.001–87.005.

2

§ 87.003.

3

§ 87.001(9).

4

562 S.W.3d 570 (Tex. App.—Houston [1st Dist.] 2018) (2–1).

5

See Am. Int’l Charolais Ass’n, The Charolais Heritage ... A Brief History, https://charolaisusa.com/history.php (last visited June 8, 2020).

6

See TEX. CIV. PRAC. & REM. CODE § 71.002(a) (authorizing “[a]n action for actual damages arising from an injury that causes an individual’s death”), § 71.021(a)–(b) (authorizing “[a] cause of action for personal injury to the health, reputation, or person of an injured person” by the decedent’s “heirs, legal representatives, and estate”).

7

562 S.W.3d at 583.

8

Equine Activity Act, 74th Leg., R.S., ch. 549, 1995 Tex. Gen. Laws 3318 (codified at TEX. CIV. PRAC. & REM. CODE ch. 87).

9

See Pruski v. Garcia, 594 S.W.3d 322, 328 n.2 (Tex. 2020) (“This is the history of the legislation, not legislative history.” (quoting Ojo v. Farmers Group, Inc., 356 S.W.3d 421, 445 n.31 (Tex. 2011) (Willett, J., concurring in part))).

10

See Krystyna M. Carmel, The Equine Activity Liability Acts: A Discussion of Those in Existence and Suggestions for a Model Act, 83 KY. L.J. 157, 157 (1995) (“[Equine Acts] have arisen in the wake of state legislatures’ recognition of the inherent risks associated with equine activities .... [Their] purpose ... is to encourage equine activities by limiting the civil liability of those involved in such activities, in light of the reality that rising insurance costs and increased litigation would put many equine professionals and equine facilities out of business.”).

11

See, e.g., Farley v. M M Cattle Co., 529 S.W.2d 751, 758 (Tex. 1975).

12

See Carmel, supra note 10, at 157 n.2 (listing state statutes).

13

Equine Act, sec. 87.003, 1995 Tex. Gen. Laws at 3319.

14

Sec. 87.003(1)–(2), 1995 Tex. Gen. Laws at 3319.

15

Sec. 87.001(4)(A), 1995 Tex. Gen. Laws at 3318.

16

Sec. 87.001(4)(B), 1995 Tex. Gen. Laws at 3319.

17

Sec. 87.001(6), 1995 Tex. Gen. Laws at 3319.

18

Sec. 87.001(3)(A), 1995 Tex. Gen. Laws at 3318.

19

Sec. 87.001(3)(G), 1995 Tex. Gen. Laws at 3318.

20

Sec. 87.001(3)(D), 1995 Tex. Gen. Laws at 3318.

21

Sec. 87.001(3)(B)–(C), 1995 Tex. Gen. Laws at 3318.

22

Sec. 87.001(3)(E), 1995 Tex. Gen. Laws at 3318.

23

Sec. 87.001(1), 1995 Tex. Gen. Laws at 3318.

24

Id.

25

Sec. 87.001(3), 1995 Tex. Gen. Laws at 3318.

26

Sec. 87.001(3)(A), 1995 Tex. Gen. Laws at 3318.

27

Sec. 87.001(3)(G), 1995 Tex. Gen. Laws at 3318.

28

Sec. 87.001(4)(A), 1995 Tex. Gen. Laws at 3318.

29

Sec. 87.003, 1995 Tex. Gen. Laws at 3319.

30

TEX. GOV’T CODE § 311.005(13).

31

Columbia Med. Ctr. of Las Colinas, Inc. v. Hogue, 271 S.W.3d 238, 256 (Tex. 2008) (“The Court must not interpret the statute in a manner that renders any part of the statute meaningless or superfluous.”).

32

Sec. 87.001(4)(A), 1995 Tex. Gen. Laws at 3318.

33

Sec. 87.001(6), 1995 Tex. Gen. Laws at 3319.

34

187 S.W.3d 523, 530 (Tex. App.—Houston [1st Dist.] 2005, no pet.). The court relied in part on the Equine Act’s legislative history—statements made by participants in the legislative process who cannot speak for the legislative body—and specifically, a bill analysis prepared by legislative staff. Id. at 528–529. While this reliance was misplaced, the court’s interpretation of the statute was otherwise sound.

35

Farm Animal Activity Act, 82nd Leg., R.S., ch. 896, 2011 Tex. Gen. Laws 896 (amending TEX. CIV. PRAC. & REM. CODE ch. 87).

36

TEX. CIV. PRAC. & REM. CODE § 87.001(2-a).

37

§ 87.001(5)(C)–(D).

38

§§ 87.001(6)-(8), (9)(B); 87.004(6).

39

§ 87.001(3)(D).

40

§ 87.003.

41

See § 87.001(4).

42

See § 87.001(5).

43

See § 87.001(7)–(8).

44

§ 87.001(9)(A).

45

See § 87.001(9)(B).

46

Equine Act, sec. 87.001(1), 1995 Tex. Gen. Laws at 3318.

47

TEX. CIV. PRAC. & REM. CODE § 87.001(1).

48

§ 87.001(3)(D).

49

See Kroger Co. v. Keng, 23 S.W.3d 347, 349–350 (Tex. 2000) (providing background on the WCA).

50

TEX. LAB. CODE ch. 406.

51

Kroger Co., 23 S.W.3d at 350 (citing TEX. LAB. CODE § 406.033(a)).

52

See TEX. LAB. CODE § 406.033(c)(2).

53

See Bridgestone/Firestone, Inc. v. Glyn-Jones, 878 S.W.2d 132, 134 (Tex. 1994) (quoting former TEX. REV. CIV. STAT. ANN. art. 6701(d), § 107C(j)).

54

Id. at 134–135.

55

Id. at 135 (Hecht, J., concurring).

1

The Court’s focus on comparable acts in other states and on the original language of the Equine Act provides interesting historical context, but it does not illuminate the meaning of the current text of Texas’s Act. For that, we must look first to the words themselves. Only if ambiguity existed in the current text of the Act should we consider looking to what prior versions of it said. The statute has been amended several times since its original passage as the Equine Act, and we must presume with each amendment the Legislature chose its words carefully. See., e.g., In re Canales, 52 S.W.3d 698, 703 (Tex. 2001); Berry v. Powell, 101 Tex. 55, 104 S.W. 1044, 1045 (1907). All that matters here is what the latest version of the statute means in plain English.

2

These are also known as “defining” and “non-defining,” or “essential” and “nonessential,” respectively. See Defining, The Oxford Dictionary of English Grammar 119–20 (2d ed. 2014); Barney Latimer, Commas: Essential and Nonessential Elements, The Modern Language Association (Aug. 13, 2019), https://style.mla.org/commas-and-essential-elements/.

3

The United States Supreme Court used similar grammatical analysis in District of Columbia v. Heller, in which it acknowledged that the Second Amendment provides an individual right to keep and bear arms. 554 U.S. 570, 128 S.Ct. 2783, 171 L.Ed.2d 637 (2008). The Second Amendment provides, “A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.” U.S. CONST. amend. II. The issue was what to make of the prefatory clause, “A well regulated Militia, being necessary to the security of a free State.” The Court held that, grammatically, “apart from [a] clarifying function, a prefatory clause does not limit or expand the scope of the operative clause.” Heller, 554 U.S. at 578, 128 S.Ct. 2783. Thus, while the modifying clause of the Second Amendment announces a purpose, it does not limit the scope of the right to keep and bear arms announced by the operative clause. Id. at 577–78, 128 S.Ct. 2783. Similarly here, the non-restrictive clause beginning with “without regard to” announces criteria that may not be considered, but it does not limit the operative clause’s definition of who qualifies as a “participant.”

4

When the Legislature wishes to limit definitions of this kind, it has done so. See, e.g., TEX. CIV. PRAC. & REM. CODE §§ 75A.001–.002. That statute, which is similar in form and substance to the FAAA, limits liability for agritourism activities. See id. § 75A.002. However, unlike the FAAA, it defines “Agritourism participant” as “an individual, other than an employee of an agritourism entity, who engages in an agritourism activity.” See id. § 75A.001 (emphasis added). The FAAA’s definition of “participant” contains no such carve-out for employees. See id. § 87.001(9).

5

“Five judges are no more likely to agree than five philosophers upon the philosophy behind an Act of Parliament, and five different judges are likely to have five different ideas about the right escape route from the prison of the text.” Scalia & Garner, supra, at 19 (quoting Patrick Devlin, The Judge 16 (1979)).

6

The court of appeals relied on legislative history to reach a conclusion similar to the Court’s. 562 S.W.3d at 579. The Court correctly avoids that mistake. “Any imagined gains from rummaging around in legislative minutiae, particularly absent any textual ambiguity, are more than dwarfed by multiple realities.” In re Reece, 341 S.W.3d 360, 397–98 (Tex. 2011) (Willett, J., concurring). One such reality is that legislative history is easily manipulable. If people think courts will consider legislative history when applying statutes, opportunistic legislators and interest groups will put all kinds of things into the legislative record. Bill summaries like the one relied upon by the court of appeals are typically written by legislative staff. Even if the bill author himself wrote the summary, it takes only one legislator to state a bill’s intent as he sees it (or, perhaps, as he wishes courts to see it). Making law, on the other hand, requires majorities of the elected representatives in both houses and the governor. This practical reality—that legislative history is easily manipulated by individual legislators and interest groups—points to a much deeper reason courts should not consult legislative history when interpreting statutes. “The greatest defect of legislative history is its illegitimacy. We are governed by laws, not by the intentions of legislators.” Conroy v. Aniskoff, 507 U.S. 511, 519, 113 S.Ct. 1562, 123 L.Ed.2d 229 (1993) (Scalia, J., concurring). Legislative history reflects the unilateral view of one legislator, not the collective view of the body empowered by the constitution to make laws. “The Legislature does not speak through individuals ... it speaks through its enactments.” Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 447 (Tex. 2009) (Hecht, J., concurring). The text of those enactments is the law, and our role extends no further than applying it as written.

7

See, e.g., TEX. CIV. PRAC. & REM. CODE § 16.008(a) (limiting the time by which a person must bring a suit against an architect, engineer, interior designer, or landscape architect for injuries related to his work); id. § 72.001 (limiting liability for motor vehicle owners for injuries to passengers); id. § 75.006 (limiting liability for landowners for injuries to others due to actions by first responders); id. § 84.006 (limiting money damages against nonhospital charitable organizations for injuries to others for which they are responsible); id. § 100A.002 (limiting liability for space flight entities for injuries to space flight participants).

8

Both common law and statute provide numerous limitations on liability for the unpredictable behavior of livestock. See, e.g., Pruski v. Garcia, 594 S.W.3d 322, 328 (Tex. 2020) (holding that a statutory limitation of liability applied against a rancher whose bull escaped its fenced pasture and was hit by vehicle in the road); Marshall v. Ranne, 511 S.W.2d 255, 258, (Tex. 1974) (noting that the common law did not impose liability on a person for injury caused by his domestic animal unless the animal was abnormally dangerous and the person had reason to know it); Tex. Cent. Ry. v. Pruitt, 101 Tex. 548, 109 S.W. 925, 927 (1908) (noting the statutory limitation of liability for railroad companies who build and maintain adequate fencing to keep out livestock); Gulf, C. & S. F. Ry. v. Trawick, 68 Tex. 314, 4 S.W. 567, 569 (1887) (noting that the common law did not impose liability against common carriers for injury to livestock that results from the animal’s “vicious propensities or inherent character”).

Supreme Court of Texas.

W & T OFFSHORE, INC., Petitioner,

v.

Wesley FREDIEU, Respondent

NO. 18-1134

|

Argued April 8, 2020

|

OPINION DELIVERED: June 5, 2020

Attorneys & Firms

Thomas C. Wright, R. Russell Hollenbeck, Shelly White, Staci Mims Vetterling, Natasha N. Taylor, Norman E. Snyder Jr., for Petitioner.

Kurt Brynilde Arnold, Kirsten M. Castañeda, Kevin H. Dubose, Anna M. Baker, Micajah Daniel Boatright, for Respondent.

Opinion

Justice Blacklock delivered the opinion of the Court, in which Chief Justice Hecht, Justice Green, Justice Guzman, Justice Devine, Justice Busby, and Justice Bland joined.

*1 The federal Longshore and Harbor Workers’ Compensation Act (LHWCA) provides the exclusive remedy for covered employees injured on the job. Respondent Wesley Fredieu was injured on an offshore oil rig owned by W & T Offshore. He sued W & T. Fredieu was not W & T’s employee, but the parties dispute whether he was nevertheless covered by the LHWCA as W & T’s “borrowed employee.” If he was, this suit cannot proceed, and he must pursue his claim through the LHWCA’s workers’ compensation process.

Although federal courts consider borrowed-employee status a question of law, the jury in this case was asked whether Fredieu was a borrowed employee. To make that determination, the jury was instructed to consider nine factors derived from Ruiz v. Shell Oil Co. See 413 F.2d 310, 312–14 (5th Cir. 1969). The jury found that Fredieu was not W & T’s borrowed employee and awarded damages to Fredieu. The trial court determined that submission of the borrowed-employee question to the jury was improper. After making fact-findings on the Ruiz factors itself, the trial court found that the evidence supported W & T’s borrowed-employee defense. On that basis, the trial court granted W & T’s motion for judgment notwithstanding the verdict. The court of appeals reversed, rejecting the trial court’s fact-findings and holding that the borrowed-employee inquiry can be a fact question for the jury. The court of appeals reinstated the jury’s verdict in Fredieu’s favor.

We disagree with some of the court of appeals’ analysis but conclude it reached the correct result. The trial court was correct that the borrowed-employee inquiry is a legal question for the court, not a fact question for the jury. In resolving that legal question on this record, however, we conclude that W & T did not carry its burden to establish Fredieu was its borrowed employee. We also affirm the jury’s award of damages for Fredieu’s future lost earning capacity. The court of appeals’ judgment is affirmed, and the case is remanded to the trial court for entry of judgment for Fredieu.

I. Background

W & T Offshore is an oil and gas producer based in Houston. Wesley Fredieu was an employee of Wood Group Production Services, Inc., an independent contractor that provides maintenance and service work on offshore drilling platforms in the Gulf of Mexico. Wood Group contracted with W & T Offshore to provide these services. Wood Group assigned Fredieu to work on a W & T platform, where he worked for over a year. In October 2011, Fredieu was sent to work on a nearby platform, where he supervised several workers who were painting and repairing handrails. While performing a safety check, Fredieu noticed a malfunctioning regulator, which regulates pressure in the gas lines on the platform. Fredieu radioed W & T’s lead operator, located on another platform, to ask how to proceed. The lead operator told Fredieu that he should remove the regulator and bring it back to him. The two began a safety analysis, which was required before potentially hazardous operations. Over the radio, the supervisor gave Fredieu instructions for removing the regulator. Before Fredieu had removed it, a pressurized pipe near the regulator broke loose, hitting his arm and knocking him to the ground. The impact fractured both bones in his left forearm, which Fredieu underwent surgery to repair.

*2 Fredieu sued W & T for negligence. In response, W & T claimed workers’ compensation benefits were Fredieu’s sole remedy because Fredieu was acting as its borrowed employee under the LHWCA. The platform where the injury occurred is on the Outer Continental Shelf in the Gulf of Mexico. Congress passed the Outer Continental Shelf Lands Act (OCSLA) in 1953, which asserted the Federal Government’s exclusive control over the Outer Continental Shelf. See 43 U.S.C. §§ 1331–1356b. The LHWCA provides workers’ compensation for certain injuries sustained by covered persons on navigable waters of the United States. See 33 U.S.C. §§ 902–03. Relevant to this case, the OCSLA applies federal law to fixed platforms on the Outer Continental Shelf and applies the LHWCA to injuries sustained by persons working on them. See 43 U.S.C. § 1333 (a)(1), (b).

The LHWCA, when it applies, provides the exclusive remedy for an injured employee who seeks compensation from his employer. See 33 U.S.C. §§ 904–05. Federal courts consider a “borrowed employee” to be an employee for purposes of the LHWCA. See, e.g., West v. Kerr-McGee Corp., 765 F.2d 526, 528–30 (5th Cir. 1985). In Ruiz v. Shell Oil Co., the Fifth Circuit announced a nine-factor test for determining whether a person is a borrowed employee. 413 F.2d at 312–14. Those factors are:

(1) Who has control over the employee and the work he is performing, beyond mere suggestion of details or cooperation?

(2) Whose work is being performed?

(3) Was there an agreement, understanding, or meeting of the minds between the original and the borrowing employer?

(4) Did the employee acquiesce in the new work situation?

(5) Did the original employer terminate his relationship with the employee?

(6) Who furnished tools and place for performance?

(7) Was the new employment over a considerable length of time?

(8) Who had the right to discharge the employee?

(9) Who had the obligation to pay the employee?

Gaudet v. Exxon Corp., 562 F.2d 351, 355 (5th Cir. 1977) (citing Ruiz, 413 F.2d at 312–13). This multi-factor balancing test, routinely used in the Fifth Circuit, has also been employed by many state and federal courts across the country. See, e.g., Canty v. A. Bottacchi, S.A. De Navegacion, 849 F. Supp. 1552, 1557–59 (S.D. Fla. 1994); Roberts v. Northrop Grumman Ship Sys., 108 So. 3d 471, 473 (Miss. Ct. App. 2013). Not all federal courts apply these factors, however. See, e.g., White v. Bethlehem Steel Corp., 222 F.3d 146, 150 (4th Cir. 2000).

The trial court here submitted the borrowed-employee question to the jury. It was submitted as a broad-form, yes-or-no question, asking only whether Fredieu was W & T’s borrowed employee at the time of the accident:

At the time of the injury in question, was Wesley Fredieu the borrowed employee of W & T?

Factors to consider in determining whether Mr. Fredieu was the borrowed employee of W & T include

[nine Ruiz factors listed]

Answer “Yes” or “No”

Answer ____________

The jury answered “No.” Although all nine Ruiz factors were listed for the jury’s consideration, the jury was not asked to make findings for any specific Ruiz factor. The jury found W & T negligent and awarded Fredieu more than $1.7 million in damages. After the verdict, W & T moved to disregard the jury’s borrowed-employee finding as immaterial, for determination of borrowed-employee status as a matter of law, for entry of a take-nothing judgment, and for judgment notwithstanding the verdict.

The trial court determined that borrowed-employee status was actually a question of law to be decided by the court. It further held that, because the broad-form borrowed-employee question did not ask the jury to make findings for each Ruiz factor, Rule 279 of the Texas Rules of Civil Procedure allowed the court to make those findings itself. After making twelve written findings of fact for the Ruiz factors, the trial court held that Fredieu was W & T’s borrowed employee. The trial court granted W & T’s motions and entered judgment notwithstanding the jury’s verdict.

*3 The court of appeals reversed. 584 S.W.3d 200, 213 (Tex. App.—Houston [14th Dist.] 2018). It held that disputed fact issues related to various Ruiz factors made the question of borrowed-employee status a question of fact. It also concluded that it was proper for the jury to balance the Ruiz factors and decide the ultimate question of borrowed-employee status. On this basis, the court of appeals held that the trial court erroneously disregarded the jury’s verdict as immaterial. It further held that Rule 279 did not permit the trial court to make fact-findings related to the Ruiz factors. The court of appeals then reviewed the jury’s borrowed-employee finding for legal sufficiency, and, after considering the Ruiz factors, affirmed. It also upheld the jury’s damages award, with one justice dissenting.

II. Discussion

W & T challenges the court of appeals’ treatment of the borrowed-employee question as well as the jury’s damages award for future lost earning capacity. We address these issues in turn.

A. The Borrowed-Employee Question of Law

“When a state court hears an admiralty case, that court occupies essentially the same position occupied by a federal court sitting in diversity: the state court must apply substantive federal maritime law but follow state procedure.” Maritime Overseas Corp. v. Ellis, 971 S.W.2d 402, 406 (Tex. 1998). The parties agree that federal substantive law and state procedural law apply to this case. They disagree about how the two interact. W & T argues that the borrowed-employee inquiry is a question of law, which means juries may not answer it in either state or federal court. Fredieu and the court of appeals reason that who decides the borrowed-employee question—as between judge and jury—can sometimes be considered a procedural question, and Texas’s broad-form jury charge practice permits juries to decide similar questions. As explained below, we agree with W & T on this point.

The parties agree that in federal court, “[t]he question of borrowed-employee status is a question of law for the district court to determine.” Billizon v. Conoco, Inc., 993 F.2d 104, 105 (5th Cir. 1993). They also agree that “in some cases, factual disputes must be resolved before the district court can make its legal determination.” Id. The Fifth Circuit consistently applies this approach. See, e.g., Delahoussaye v. Performance Energy Servs., L.L.C., 734 F.3d 389, 393 (5th Cir. 2013) (“Whether Andow was a borrowed employee is a question of law ....”). Other federal courts do the same. See, e.g., White, 222 F.3d at 150 (borrowed-employee status is “a legal standard”); In re Knudsen, 710 F. Supp. 2d 1252, 1262 (S.D. Ala. 2010) (“[T]he question of borrowed employee status is a question of law for the court to determine.”); Sobratti v. Tropical Shipping & Constr. Co., 267 F. Supp. 2d 455, 462 (D.V.I. 2003) (“Whether one is a protected borrowing employer is a question of law, to be decided by the court in the first instance.”). While the United States Supreme Court has not addressed the matter, Fredieu cites no state or federal case in which the ultimate question of borrowed-employee status was treated as a fact question for the jury.

“A question which calls for a finding beyond the province of the jury, such as a question of law, may be deemed immaterial.” Spencer v. Eagle Star Ins. Co. of Am., 876 S.W.2d 154, 157 (Tex. 1994). If the jury was asked a question of law, the trial court did not err by disregarding its answer as immaterial. Fredieu acknowledges in his brief that borrowed-employee status is “generally a legal question.” He nevertheless contends that the jury was not asked a pure question of law because many of the Ruiz factors were in genuine dispute. As Fredieu sees it, the question posed to the jury submitted the Ruiz factors in a roundabout way by instructing the jury to consider them. But this ignores the question the jury was actually asked. It was asked: “At the time of the injury in question, was Wesley Fredieu the borrowed employee of W & T?” Fredieu acknowledges that this question is generally a question of law and cites no authority to the contrary.

*4 The court of appeals suggested that “[d]etermining whether borrowed employee status is treated as a question of law or fact in any given case requires analysis of evidence pertaining to individual factors.” Fredieu, 584 S.W.3d at 213. Fredieu does not vigorously defend this proposition, and the court of appeals cited no authority for it. Nor does Fredieu identify any other authority suggesting that borrowed-employee status may be a fact question depending on the evidence. Instead, all the relevant authority consistently calls borrowed-employee status a legal question. In the Fifth Circuit, the answer to this legal question is informed by the Ruiz factors, which themselves may raise fact questions for the jury. See, e.g., Brown v. Union Oil Co. of Cal., 984 F.2d 674, 677 (5th Cir. 1993). Other than the court of appeals in this case, we are pointed to no court that has held that the ultimate question is a factual one that a jury is competent to decide.

Fredieu is correct that Texas procedure favors broad-form submission of jury questions “whenever feasible.” TEX. R. CIV. P. 277. Fredieu does not contend, however, that broad-form submission practice authorizes the submission of legal questions to juries. As the Fifth Circuit understands the LHWCA, submission of the Ruiz factors in a single broad-form question is not “feasible” because the balancing of the Ruiz factors and the ultimate determination of borrowed-employee status is a question of law. Submission to the jury of individual Ruiz factors may be necessary, however, if the resolution of fact issues related to one or more factors would be material to the court’s determination of the ultimate legal question. See, e.g., Brown, 984 F.2d at 677.

We are provided with no convincing reason to depart from the Fifth Circuit’s approach, and Fredieu does not offer any reason to think the Fifth Circuit’s view is incorrect as a matter of statutory interpretation, although he would be free to try.1 We agree with the Fifth Circuit that, in LHWCA cases, “the question of borrowed-employee status is a question of law for the district court to determine.” Billizon, 993 F.2d at 105. Submitting this legal question to the jury was improper, and the trial court did not err in disregarding the jury’s answer to it.

*5 On the other hand, Fredieu is correct that borrowed-employee status is a defense on which W & T bore the burden of proof. See Exxon Corp. v. Perez, 842 S.W.2d 629, 631 (Tex. 1992) (per curiam). W & T was therefore required to secure any jury findings necessary to support its defense. Phila. Indem. Ins. Co. v. White, 490 S.W.3d 468, 485 (Tex. 2016) (explaining that the burden of proof is on the defendant to present sufficient evidence to establish affirmative defenses and obtain the requisite jury findings); Franks v. Associated Air Ctr., Inc., 663 F.2d 583, 587 (5th Cir. 1981) (holding that the party asserting the borrowed-employee defense bears the burden of proof). As explained above, in the LHWCA context, “borrowed employee status is a matter of law ... but some cases involve factual disputes on the issue of borrowed employee status and require findings by a fact-finder.” Brown, 984 F.2d at 677.

W & T did not ask the trial court to submit any of the Ruiz factors to the jury. It does not contend the Ruiz factors provide the wrong framework. Instead, it agrees they must be submitted to the jury when necessary, but it admittedly never asked the trial court to do so. W & T therefore waived its entitlement to fact-findings on the Ruiz factors.2 Having secured no fact-findings in its favor on the Ruiz factors, W & T is only entitled to have a Ruiz factor weighed in its favor if (1) there is no genuine, material dispute that the factor weighs in its favor, or (2) the evidence conclusively establishes that the factor weighs in its favor. See Phila. Indem. Ins. Co., 490 S.W.3d at 489 (explaining that, if a party fails to obtain requisite fact-findings on an affirmative defense, the evidence must conclusively establish those facts for the party to prevail on them on appeal). W & T embraces this burden to some extent, arguing that the evidence conclusively establishes the disputed Ruiz factors in its favor. As explained below, we disagree and, after analyzing all of the evidence, hold that W & T failed to prove its borrowed-employee defense.3

B. The Ruiz Factors

*6 To analyze whether Fredieu was a borrowed employee, we look to federal authority applying the LHWCA, not state employment law. The LHWCA borrowed-employee inquiry is “best viewed as a question of the extent of coverage under the LHWCA, [so] federal law applies.” Gaudet, 562 F.2d at 357. We therefore look to LHWCA caselaw for guidance in determining when an independent contractor’s employee, like Fredieu, becomes the borrowed employee of the company to which he provides services.

Although not all federal courts agree that the nine Ruiz factors provide a useful framework for determining borrowed-employee status,4 the Fifth Circuit has consistently applied them for many years, and neither party suggests we should do otherwise. We therefore apply the nine-factor Ruiz analysis as the parties request, considering each factor before determining as a matter of law whether W & T proved Fredieu was its borrowed employee. The nine factors are:

(1) Who has control over the employee and the work he is performing, beyond mere suggestion of details or cooperation?

(2) Whose work is being performed?

(3) Was there an agreement, understanding, or meeting of the minds between the original and the borrowing employer?

(4) Did the employee acquiesce in the new work situation?

(5) Did the original employer terminate his relationship with the employee?

(6) Who furnished tools and place for performance?

(7) Was the new employment over a considerable length of time?

(8) Who had the right to discharge the employee?

(9) Who had the obligation to pay the employee?

Gaudet, 562 F.2d at 355 (citing Ruiz, 413 F.2d at 312–13). “[N]o one of these factors, or any combination of them, is decisive, and no fixed test is used to determine the existence of a borrowed-servant relationship.” Ruiz, 413 F.2d at 312.

Factor 1: Who had control over the employee and the work he was performing, beyond mere suggestion of the details or cooperation?

This factor, while not determinative, is the “central factor” for analyzing borrowed-employee status. Brown, 984 F.2d at 676. The control factor “is perhaps the most universally accepted standard for establishing an employer-employee relationship.” Ruiz, 413 F.2d at 312. Fredieu was hired and trained by Wood Group. Wood Group assigned him to work on the W & T platform. Fredieu presented evidence showing that W & T was generally hands-off with respect to his work. He testified that W & T did not give him “constant or regular instruction,” and that W & T did not tell him how to do things or control the details of his day-to-day work. On the day of the accident, W & T personnel summarized generally what Fredieu should do by radio, but “left a bunch of steps out,” according to an expert witness. No W & T supervisor was present on the platform or dispatched to supervise Fredieu when he discovered the faulty regulator. Fredieu also points to one telling piece of trial testimony from a W & T Vice President who said that Fredieu was in control of his own work, and that W & T “trusted his judgment” in supervising other contract workers on the day of the accident.

W & T argues that, while it did not control Fredieu’s day-to-day routine activities, Fredieu himself testified that he received guidance and direction from W & T for anything “that needed to be done outside of a routine activity that took place each and every day.” W & T also argues that it controlled Fredieu and the details of his work at the moment of the accident. A W & T employee was giving Fredieu instructions on how to remove the regulator when Fredieu was injured. Fredieu alerted W & T to the regulator malfunction and testified, “I have to call and let [a W & T lead operator] know what my findings were and how he wanted me to go about fixing it.” Fredieu also testified that he was doing what he was told by W & T in attempting to remove the regulator.

*7 We conclude that this conflicting evidence raises a material fact issue on the control factor, which should have been submitted to the jury. W & T did not seek such a finding; nor does the evidence conclusively establish its control of Fredieu. W & T is therefore not entitled to have the control question weighed in its favor. While W & T gave remote instructions to Fredieu at the time of the accident, this was a function of safety protocol as part of a required “Job Safety Analysis,” not the kind of day-to-day control that is crucial in considering when an employee of one entity has become the borrowed employee of another as a matter of law. Furthermore, testimony by W & T’s Vice President that W & T did not control Fredieu weighs in favor of Fredieu on this issue and at least created a material fact issue on the key question of control.

Factor 2: Whose work is being performed?

Fredieu agrees that he performed W & T’s work.

Factor 3: Was there an agreement, understanding, or meeting of the minds between the original and the borrowing employer?

Fredieu argues that there was such an agreement. He points to a portion of the master service contract (MSC) between W & T and Wood Group labeled “Independent Contractor,” which states that “[Wood Group] is an independent contractor and that neither Contractor nor Contractor’s principals, partners, employees, or subcontractors are servants, agents, or employees of W & T.” The MSC also states that an employee “shall always be the employee of the entity from which he receives his paycheck,” and Fredieu was paid by Wood Group.

W & T points to other language in the MSC that required W & T to maintain workers’ compensation insurance with “appropriate Borrowed Servant or Alternate Employer endorsement(s) in favor of W & T Group and such that W & T Group shall have full coverage as to all members of Contractor Group (who may be deemed borrowed servants or statutory employees of W & T Group).” W & T also argues that “[t]he reality at the worksite and the parties’ actions in carrying out a contract ... can impliedly modify, alter, or waive express contract provisions.” Melancon v. Amoco Prod. Co., 834 F.2d 1238, 1245 (5th Cir. 1988). It points to the fact that Fredieu shared sleeping, showering, and eating facilities with W & T’s employees and received instructions as to which tasks he would be performing on W & T’s platforms.

We are unconvinced that living arrangements on the rig impliedly modified Fredieu’s contractual relationship with W & T. W & T contractually disclaimed that Fredieu was its employee. In contexts other than the LHWCA, it would no doubt have vigorously resisted the suggestion that it had any kind of employment relationship with him. While the MSC’s requirement that W & T maintain workers’ compensation insurance for Wood Group’s employees provides considerable support for W & T’s position, it does not conclusively establish that Wood Group and W & T agreed Fredieu would be W & T’s borrowed employee. An unresolved material fact question remains on this question, and in the absence of a fact-finding in W & T’s favor, this factor cannot be weighed for W & T.

Factor 4: Did the employee acquiesce in the new work situation?

There is no dispute Fredieu agreed to his assignment to work on the W & T rigs.

Factor 5: Did the original employer terminate his relationship with the employee?

This factor asks whether the original employer had, in effect, temporarily terminated its relationship with the employee, but does not “require[ ] a lending employer to completely sever his relationship with the employee.” Capps v. N.L. Baroid-NL Indus., Inc., 784 F.2d 615, 617 (5th Cir. 1986). “The emphasis ... should focus on the lending employer’s relationship with the employee while the borrowing occurs.” Id. at 618. Courts consider whether the lending employer supervises the employee’s work, has the right to relocate the employee to another location if needed, or otherwise restricts or exercises control over the employee. Mere nominal control by the lending employer indicates a termination of the relationship. See Melancon, 834 F.2d at 1246.

*8 The evidence indicated that Fredieu’s supervisor at Wood Group determined his platform assignments. In addition, both Fredieu and his supervisor testified that Wood Group could assign Fredieu to work for any platform or for other customers, and Fredieu testified that he continued to be trained by Wood Group. There is also evidence that Wood Group outfitted Fredieu in a hard hat, shirt, and jacket—all with Wood Group’s logo—and with pants, safety glasses, gloves, and boots. In response, W & T argues that this authority by Wood Group only constituted nominal control over Fredieu and points to Fredieu’s testimony that he never called his supervisor at Wood Group to receive instructions about his work for W & T.

Wood Group’s ability to assign, reassign, and relocate Fredieu is some evidence favoring Fredieu on this factor. Although the evidence is mixed, its indeterminacy undermines W & T’s effort to conclusively establish that the Wood Group effectively terminated its relationship with Fredieu.

Factor 6: Who furnished tools and place for performance?

Fredieu concedes that W & T provided the place for performance but argues that W & T, Wood Group, and Fredieu himself all contributed tools for his work. Fredieu testified that Wood Group provided him with a hard hat, shirt, jacket, pants, safety glasses, gloves, and boots. He also stated that he provided his own crescent wrench and channel-lock pliers, which he says were the tools he used almost exclusively on jobs.

W & T argues that it provided a radio and all of the specialized equipment needed for Fredieu’s work, like “tubing, fittings, hammer unions, pipe wrenches, bolts on flanges and hammer wrenches.” W & T unquestionably provided the place of performance, although most of the basic tools Fredieu regularly used were provided by Wood Group or himself. This factor favors W & T, but it makes little difference to the ultimate determination when weighed against the other factors.

Factor 7: Was the new employment over a considerable length of time?

Fredieu agrees that the new employment was over a considerable length of time.

Factor 8: Who had the right to discharge the employee?

W & T had the right to terminate Fredieu’s services. Fredieu does not challenge conclusions by the trial court and the court of appeals that this factor favors W & T.

Factor 9: Who had the obligation to pay the employee?

The evidence is undisputed that Fredieu’s paychecks came from Wood Group. While W & T paid Wood Group for the services provided by Wood Group’s employees, this factor favors Fredieu because, from his perspective, the employer obligated to pay him was Wood Group. There was no evidence that W & T’s obligations to pay Wood Group had to be met before Wood Group was obligated to pay Fredieu.

* * *

Because the ultimate question of borrowed-employee status is one of law, we approach de novo the question whether Fredieu was W & T’s borrowed employee. See, e.g., State v. Delany, 197 S.W.3d 297, 300 (Tex. 2006). We do so, however, with the obligation to weigh the Ruiz factors in light of how they were resolved—or in this case not resolved—by the fact-finder.5 Considering all the Ruiz factors and W & T’s failure to obtain fact-findings in its favor on any of them, we conclude the evidence does not establish that Fredieu was W & T’s borrowed employee. As discussed above, some factors favor W & T, but some do not clearly favor either party, including the “central question” of control. Traditionally, control has been the key factor in determining borrowed-employee status. E.g., Standard Oil Co. v. Anderson, 212 U.S. 215, 221, 29 S.Ct. 252, 53 L.Ed. 480 (1909) (“If that other furnishes him with men to do the work and places them under his exclusive control in the performance of it, those men became pro hac vice the servants of him to whom they are furnished.”); Hebron v. Union Oil Co. of Cal., 634 F.2d 245, 247 (5th Cir. 1981) (per curiam) (“The central question in borrowed servant cases is whether someone has the power to control and direct another person in performance of his work.”); Capps, 784 F.2d at 617 (“[T]he courts place the most emphasis on the first factor, control over the employee.”).

*9 Here, W & T did not conclusively establish that it controlled Fredieu’s day-to-day work. W & T’s vice president testified that Fredieu was in control of his own work. Moreover, Wood Group maintained a substantial degree of control of Fredieu in the ability to assign him, reassign him, or relocate him to platforms or different customers altogether. Fredieu also wore a Wood Group uniform and equipment, reinforcing his separation from W & T’s employees. There is countervailing evidence indicating W & T’s control of Fredieu’s work duties. And the MSC’s provision requiring W & T to purchase workers’ compensation insurance for Wood Group employees indicates that the two employers anticipated a borrowed-employee relationship. Given the conflicting evidence, however, we cannot conclude that W & T conclusively established its control of Fredieu.

W & T points to several cases to support its position that it controlled Fredieu. In Robertson v. W & T Offshore, Inc., a cook on a W & T platform was held to be W & T’s borrowed employee. See 712 F. Supp. 2d 515, 537 (W.D. La. 2010).

Notably there, the cook’s “day-to-day activities were directed by his W & T supervisors.” Id. at 525–26. In Magnon v. Forest Oil Corp., a rig operator was held to be Forest Oil’s borrowed employee. See No. 06-0587, 2007 WL 2736612, at *7 (W.D. La. 2007) (mem. op.). While the operator there argued that he had received all of his skilled training prior to working on the Forest Oil rig, he also admitted “that he received his daily instructions from and was directed by Forest Oil employees.” Id. at *3. In Hotard v. Devon Energy Production Co., a mechanic was held to be Devon’s borrowed employee. See 308 F. App’x 739, 743 (5th Cir. 2009). There, the mechanic was “supervised totally by Devon employees” and testified that “he had no contact with [his original employer] while on the platform.” Id. at 742. In fact, there was only one factor that even conceivably cut in favor of the employee in that case. Id. Finally, in Jackson v. Total E&P USA, Inc., a mechanic was held to be the borrowed employee of Total E&P. See 341 F. App’x 85, 87 (5th Cir. 2009). There, all of the mechanic’s work “was directed by and for the benefit of Total,” and the mechanic’s original employer “was essentially operating as a placement agency.” Id. None of these cases involves evidence of independence as strong as Fredieu’s, including testimony from a W & T vice-president confirming Fredieu’s claim to control his own work on the platform.

Again, it was W & T’s burden to prove that Fredieu was its borrowed employee. The primary evidence W & T offers of its control of Fredieu is direction for things “that needed to be done outside of a routine activity” and instructions related to the Job Safety Analysis occurring immediately before his accident. This is insufficient to demonstrate that W & T had the level of “power to control and direct another person in the performance of his work” necessary to convert Fredieu into its borrowed employee. Hebron, 634 F.2d at 247. “ ‘Co-operation,’ as distinguished from ‘subordination,’ is not enough to create an employment relationship.” Ruiz, 413 F.2d at 313 (citing Standard Oil, 212 U.S. at 226, 29 S.Ct. 252). Even accepting for the sake of argument the idea that Fredieu controlling his own day-to-day work is not relevant to the control analysis, based on the other available evidence, W & T failed to conclusively establish that it did control him. After considering all the Ruiz factors, we conclude that, on the whole, W & T did not establish that Fredieu was its borrowed employee.

C. Damages

W & T also challenges the legal sufficiency of the evidence to support the jury’s award of $950,000 in damages for Fredieu’s future lost earning capacity. The “test for legal sufficiency must always be whether the evidence at trial would enable reasonable and fair-minded people to reach the verdict under review.” City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). If more than a scintilla of competent evidence supports the judgment, the jury’s verdict must be upheld. Burbage v. Burbage, 447 S.W.3d 249, 259 (Tex. 2014).

*10 Fredieu called an economist, Kenneth McCoin, to provide expert witness testimony concerning Fredieu’s future lost earning capacity. McCoin estimated that Fredieu had a pre-injury future earning capacity of $1,611,954 based on earnings of $38,000/year working for Wood Group. He made a low-end calculation of Fredieu’s post-injury future earning capacity of $576,530 based on earnings of $18,000/year. After W & T pointed out that Fredieu had already returned to work for a company called Berry Brothers at a higher hourly rate (though with far fewer hours) than he earned from Wood Group, McCoin adjusted his calculations to estimate a high-end post-injury future earning capacity of $946,530 based on yearly earnings of $28,758 in Fredieu’s new position. These estimates left a range of future lost earning capacity of $665,424 on the low end and $1,035,424 on the high end. The jury ultimately awarded Fredieu $950,000 as damages for future lost earning capacity.

In addition to the expert’s calculations, the jury heard evidence about Fredieu’s medical condition, which was relevant to his future earning capacity, especially given his history working physically demanding jobs on offshore rigs. Fredieu has two plates and thirteen screws in his injured arm, is restricted from jobs requiring heavy lifting, and will always have pain and a limited range of motion. Fredieu also testified that, after his injury and prior to working for Berry Brothers, he was out of work for two years. At trial, W & T pointed to the fact that Fredieu returned to work full time after his accident and earned more per hour than he did working for Wood Group. The evidence established that Fredieu was earning $16/hour for regular hours and $24/hour for overtime at Wood Group. After the accident, Berry Brothers paid him $20/hour. By trial, he had received a raise to $23/hour.

W & T argues that both of McCoin’s estimates failed to account for Fredieu’s $23/hour wage at the time of trial and are thus unreliable. But Fredieu offered McCoin’s testimony as a “starting point” for the jury to use as a baseline in calculating his future lost earning capacity. The jury was aware of the $23/hour figure and could have taken it into account. W & T also argues that McCoin did not offer testimony of actual lost earning capacity, instead resorting to calculations of the “time-value of money, the probable number of years that Fredieu would work in the future, and other figures used in calculating lost earning capacity.” However, W & T made no objection or motion to exclude McCoin’s testimony. When expert “opinion is admitted in evidence without objection, it may be considered probative evidence even if the basis for the opinion is unreliable.” City of San Antonio v. Pollock, 284 S.W.3d 809, 818 (Tex. 2009). Thus, even if McCoin’s testimony would have been inadmissible as expert testimony if objected to, it was nevertheless some probative evidence of lost future earning capacity for the jury to consider.

W & T points to our prior statement that “[i]f [a] plaintiff’s earning capacity is not totally destroyed, but only impaired, the extent of his loss can best be shown by comparing his actual earnings before and after his injury.” McIver v. Gloria, 140 Tex. 566, 169 S.W.2d 710, 712 (1943). In the same case, however, we also observed that “[i]n a personal injury suit the amount which the plaintiff might have earned in the future is always uncertain, and must be left largely to the sound judgment and discretion of the jury.” Id. We further stated that the plaintiff “is not required to prove the exact amount, but only the facts from which the jury, in the exercise of sound judgment and discretion, can determine the proper amount.” Id. at 712–13. Finally, we included as proper considerations “the jury’s common knowledge and experience and sense of justice.” Id. at 713. While standards of evidentiary review have evolved since 1943, we should not selectively rely on one statement from McIver and ignore all the others.

*11 We agree with W & T that evidence of actual earnings at the time of trial is the best evidence of future earning capacity, but it is not the only evidence in an inquiry that looks many years or decades into a person’s future. It is not disputed that Fredieu earned a higher hourly wage working for Berry Brothers after his accident. However, he worked far fewer hours in his new position, and the jury heard testimony that his new position was less lucrative than the salary would indicate. It was 700 miles from his home in Louisiana, and his living expenses were not covered, as they had been working on offshore rigs. Further, the jury was not limited to consideration of evidence concerning Fredieu’s hourly wages in raw numbers; rather, the consideration is one of earning capacity. Reliance Steel & Aluminum Co. v. Sevcik, 267 S.W.3d 867, 872 (Tex. 2008) (“It is of course true that [the plaintiff] was entitled to damages for future earning capacity, not just future earnings.”); McIver, 169 S.W.2d at 713 (“[T]he measure of [the plaintiff’s] loss is his capacity to earn, not his actual earnings.”). Given Fredieu’s physical impairment, the work options available to him in the future were limited. The jury heard testimony that Fredieu has been fortunate to find a light-duty job at Berry Brothers through help from relatives and that if he lost that position—in the volatile oil and gas industry—it would be difficult to find a comparable one given his impairment and experience. It was within the “sound judgment and discretion” of the jury to take into account these facts in arriving at a proper damages amount. Id. at 712–13.

In evaluating the legal sufficiency of a damages award, we do not lightly reject the judgment of a jury. Houston Unlimited, Inc. Metal Processing v. Mel Acres Ranch, 443 S.W.3d 820, 838 (Tex. 2014). We conclude the jury heard sufficient evidence to support its calculation of lost earning capacity. The amount awarded was not backed by scientifically provable calculations, but few future-earning-capacity awards could be. The jury could certainly have credited W & T’s arguments and awarded a lower amount, but “[i]f the evidence conflicts, it is the province of the jury to determine which evidence to credit.” Id. at 833. In light of the abundance of medical and other evidence provided by witnesses and Fredieu himself, a reasonable and fair-minded jury could have arrived at the number this jury did. Accordingly, we uphold the jury’s award of $950,000 to Fredieu for future lost earning capacity and affirm the court of appeals on this issue.

III. Conclusion

We hold that borrowed-employee status is a legal question to be answered by the courts, subject to any subsidiary fact-findings that may be necessary. We also hold that, based on the disputed evidence and the absence of fact-findings in W & T’s favor, W & T failed to prove its borrowed-employee defense. Although we do not agree with all of the court of appeals’ reasoning, we agree with the court of appeals that Fredieu was entitled to judgment on the jury’s findings of liability and damages. For these reasons, the court of appeals’ judgment is affirmed.

Justice Boyd filed a dissenting opinion.

Justice Lehrmann did not participate in the decision.

Justice Boyd, dissenting.

Properly treating the determinative issue as a question of law, the trial court concluded that Wesley Fredieu was W & T Offshore’s “borrowed employee” when he was injured while working on W & T’s offshore platform. The Court says the trial court erred because W & T did not obtain favorable jury findings on, or otherwise “conclusively establish,” four of the “factors” that federal courts consider when deciding the determinative issue. But “factors” are not “facts,” and the facts here are undisputed. W & T was not required to obtain jury findings on or conclusively establish the “factors” that courts consider when deciding the borrowed-employee question as a matter of law. Instead, W & T merely had to submit sufficient evidence to support the trial court’s favorable matter-of-law conclusion, and we must now decide the issue de novo based on that evidence. Because the facts are undisputed and support the conclusion that Fredieu was W & T’s borrowed employee, I respectfully dissent.

I.

The Law on Borrowed Employees

The Court and I agree on most all of the governing legal principles. If Fredieu was W & T’s borrowed employee when he was injured, he cannot recover on his tort claim against W & T and instead is limited to recovering workers-compensation benefits. See 33 U.S.C. §§ 902–05 (Longshore and Harbor Workers’ Compensation Act); 43 U.S.C. § 1333(a)(1), (b) (Outer Continental Shelf Lands Act). W & T’s assertion that Fredieu was its borrowed employee constitutes an affirmative defense on which W & T bore the burden of proof. See Allen v. Texaco, Inc., 37 F. App’x 91, 91 (5th Cir. 2002) (per curiam).

*12 Whether a claimant was the defendant’s borrowed employee, however, presents a question of law for the courts to decide. Billizon v. Conoco, Inc., 993 F.2d 104, 105 (5th Cir. 1993); Ruiz v. Shell Oil Co., 413 F.2d 310, 314 (5th Cir. 1969). Under the Fifth Circuit’s approach, which the parties agree we should follow here, courts decide the question by considering nine “Ruiz factors”: (1) who controlled the claimant’s work at the time of the injury, (2) whose work the claimant was performing, (3) the terms of any agreement between the defendant and the claimant’s original employer, (4) the claimant’s acquiescence in the work arrangement, (5) whether the original employer temporarily terminated its relationship with the claimant while he was working for the defendant, (6) who furnished the claimant’s tools and workplace, (7) the duration of the claimant’s work for the defendant, (8) who had the right to discharge the claimant, and (9) who was obligated to pay the claimant. Ruiz, 413 F.2d at 312–13.

The defendant need not prove that every Ruiz factor supports the conclusion that the claimant was its borrowed employee. Billizon, 993 F.2d at 106. In fact, no single factor or any particular combination of factors is decisive. Ruiz, 413 F.2d at 312. Instead, courts must balance all the evidence in light of the Ruiz factors to determine whether the defendant was the claimant’s “true employer,” as opposed to a mere third party, in a sense that justifies limiting the claimant’s recovery consistent with the purposes of the workers-compensation system. Gaudet v. Exxon Corp., 562 F.2d 351, 357 (5th Cir. 1977).

To answer this question of law, the courts must of course rely on the evidence the parties present regarding the Ruiz factors. If the parties dispute the relevant facts and provide conflicting evidence that creates a fact issue material to one or more of the factors, the court may be required to have a jury determine the true facts and resolve that dispute. Brown v. Union Oil Co. of Cal., 984 F.2d 674, 677 (5th Cir. 1993) (per curiam). Once the jury resolves any material factual disputes, however, the court itself must consider the totality of the evidence, using the Ruiz factors as its guide, to decide whether the claimant was the defendant’s borrowed employee. Billizon, 993 F.2d at 105; Brown, 984 F.2d at 679; Ruiz, 413 F.2d at 314.

Here, the trial court initially erred by instructing the jury to decide whether Fredieu was W & T’s borrowed employee. But in response to W & T’s post-verdict motions, the trial court corrected that error by disregarding the jury’s answer and deciding the issue as a question of law. The Court and I agree that the trial court acted properly in doing so. See, e.g., ante at –––– (“Submitting this legal question to the jury was improper, and the trial court did not err in disregarding the jury’s answer to it.”). We part ways, however, on whether fact issues precluded the trial court’s answer to the legal question.

II.

W & T’s Burden of Proof in the Trial Court

To the extent W & T bore an evidentiary burden on the question of law,1 its burden was to establish the necessary facts by a preponderance of the evidence. See Bergeron v. Tenneco Oil Co., No. Civ. A. 87-1317, 1988 WL 110445, at *5 (W.D. La. Oct. 18, 1988) (“[D]efendant has failed to establish by a preponderance of the evidence that plaintiff was a borrowed employee.”), aff’d 880 F.2d 411 (5th Cir. 1989); see also Rollans v. Unocal Expl. Corp., No. Civ. A. 93-431, 1993 WL 455731, at *2 (E.D. La. Nov. 4, 1993) (“Defendants failed to prove by a preponderance of the evidence that UNOCAL exercised sufficient control over Plaintiff, beyond mere suggestion of details or cooperation, to render him a borrowed employee.”). Fredieu himself conceded at the charge conference that W & T only ever had to prove the necessary facts by a preponderance of the evidence.

*13 W & T, therefore, merely had to submit sufficient evidence to enable the trial court to answer the question of law in its favor. If it failed to do that—whether by failing to obtain jury findings on disputed material facts or simply by failing to present the necessary evidence—the trial court should have concluded as a matter of law that W & T failed to carry its burden to establish that Fredieu was W & T’s borrowed employee. But if W & T did submit sufficient evidence (with or without obtaining jury findings on particular disputed facts), the trial court properly concluded as a matter of law that Fredieu was W & T’s borrowed employee. In either case, the trial court’s answer to the question of law depended on the sufficiency of the totality of the evidence presented regarding the Ruiz factors.

The Court asserts that W & T had to either secure “fact-findings in its favor on the Ruiz factors” or “conclusively establish[ ] that the factor weighs in its favor,” and suggests that W & T agrees that it bore that burden. Ante at –––– (“W & T embraces this burden to some extent, arguing that the evidence conclusively establishes the disputed Ruiz factors in its favor.”). This suggestion misstates W & T’s position. In the trial court, in the court of appeals, and in this Court, W & T has repeatedly asserted two alternative arguments in support of the trial court’s decision to disregard the jury’s finding that Fredieu was not W & T’s borrowed employee: (1) that the jury’s answer is immaterial because the borrowed-employee issue presents a question of law that the jury could not decide, or alternatively, (2) that the trial court correctly disregarded the jury’s answer because the evidence did not support it.

W & T acknowledges that, to prevail on its alternative argument, it would have to demonstrate that no evidence supports the jury’s finding, or (as the Court states) that the evidence conclusively established that Fredieu was W & T’s borrowed employee. See Shields Ltd. P’ship v. Bradberry, 526 S.W.3d 471, 480 (Tex. 2017) (“When a party attacks the legal sufficiency of an adverse [jury] finding on an issue on which it bears the burden of proof, the judgment must be sustained unless the record conclusively establishes all vital facts in support of the issue.”). In support of this alternative argument, W & T has acknowledged this burden and has argued that the evidence conclusively established that Fredieu was its borrowed employee.

But we need not reach W & T’s alternative argument because, as the Court itself agrees, W & T’s primary argument is correct: the trial court correctly disregarded the jury’s answer as immaterial because the question presented a question of law that only the court could decide. A trial court may disregard an immaterial jury answer, and an answer to a question that should never have been submitted to the jury, such as a question of law, is immaterial. Spencer v. Eagle Star Ins. Co. of Am., 876 S.W.2d 154, 157 (Tex. 1994); see Quick v. City of Austin, 7 S.W.3d 109, 116 (Tex. 1998) (“The submitted jury questions, being questions of law, are immaterial and will not be considered.”). As the Court itself agrees, the question the trial court asked the jury in this case was a question of law, not a “roundabout way” of asking the jury to resolve disputed facts. Ante at ––––. And because it was a question of law, “the trial court did not err by disregarding [the jury’s] answer as immaterial.” Ante at ––––.2

*14 Having properly disregarded the jury’s immaterial answer, the trial court was then required to resolve the issue of Fredieu’s borrowed-employee status as a question of law, considering the totality of the evidence in light of the Ruiz factors. And because Fredieu’s borrowed-employee status presents a question of law, this Court must address that issue de novo and decide for ourselves whether, in light of the Ruiz factors and the evidence presented, Fredieu was W & T’s borrowed employee. See Williams v. Compression Coat Corp., 136 F.3d 138 (5th Cir. 1998) (per curiam) (conducting de novo review to decide claimant’s borrowed-employee status); see also LaLonde v. Gosnell, 593 S.W.3d 212, 220 (Tex. 2019) (“Appellate courts do not defer to the trial court on questions of law. Deference must be afforded to the trial court’s disposition of disputed facts, but when there are none, as here, our review is entirely de novo.”).

Even if the fact-finder was required to resolve disputed facts, we must now decide the ultimate legal issue de novo in light of the totality of the evidence, including any such findings. City of Austin v. Travis Cty. Landfill Co., 73 S.W.3d 234, 241 (Tex. 2002) (“While we depend on the fact-finder to resolve disputed facts regarding the extent of governmental intrusion, the ultimate issue whether the facts constitute a taking is a question of law.”); see Stockton v. Offenbach, 336 S.W.3d 610, 615 (Tex. 2011) (“Under an abuse of discretion standard, the appellate court defers to the trial court’s factual determinations if they are supported by evidence, but reviews the trial court’s legal determinations de novo.”).

W & T never had to “conclusively establish” that Fredieu was its borrowed employee. Once the trial court properly disregarded the jury’s answer as immaterial, the court then had to decide that legal question based on the evidence submitted. And under the proper de novo standard of review, we must now do the same.

III.

Absence of Material Fact Issues

The Court concludes that W & T “failed to prove its borrowed-employee defense” because it failed to obtain “fact-findings in its favor on the Ruiz factors.” Ante at ––––. According to the Court, “[s]ubmission to the jury of individual Ruiz factors may be necessary ... if the resolution of fact issues related to one or more factors would be material to the court’s determination of the ultimate legal question.” Ante at ––––. But this reasoning conflates “disputed facts” with “disputed factors.” Although the parties dispute whether the facts relating to particular factors weigh for or against borrowed-employee status, the parties do not dispute the facts themselves.

The Ruiz factors are not facts. They merely guide a court’s analysis as it determines the legal conclusions to draw from the facts. See Gaudet, 562 F.2d at 358 (explaining the borrowed-employee analysis considers “the implications to be drawn from the facts”). If the facts relevant to a particular factor are disputed, the court may need to have the fact-finder resolve that factual dispute before the court can decide how to weigh that factor when reaching its legal conclusion. But it need not ask the fact-finder to decide whether the factor weighs in favor of or against borrowed-employee statuts.3

*15 Here, for example, the Court concludes that “conflicting evidence raises a material fact issue on the control factor,” so that factor “should have been submitted to the jury.” Ante at ––––. But as the Court’s own description of the facts confirms, the parties did not dispute any of the facts relevant to W & T’s control over Fredieu’s work at the time of his injury:

- The Wood Group hired and trained Fredieu and assigned him to work on the W & T platform.

- W & T was generally hands-off with respect to Fredieu’s work, did not give Fredieu constant or regular instruction or tell him how to do things, and did not control the details of his day-to-day work. Instead, W & T generally allowed Fredieu to control his own work and supervise other contractors’ workers.

- W & T did give Fredieu guidance and direction for non-routine activities outside of his typical day-to-day tasks.

- No W & T supervisor was present on the platform when Fredieu was injured. But when Fredieu discovered the faulty regulator, he knew he had to report it to W & T and find out how W & T wanted him to fix it, so he contacted W & T by radio.

- When the accident occurred, W & T was telling Fredieu the steps to take to remove the regulator, although it left a lot of steps out.

Neither party disputed any of these facts. Instead, they disputed whether (and the extent to which) W & T controlled Fredieu’s work in light of these undisputed facts. That’s not a factual dispute arising from conflicting evidence, it’s a dispute over the correct answer to a question of law based on undisputed facts.

A genuine fact issue arises when the parties submit conflicting evidence on the events that occurred, creating a dispute as to what really happened. In Brown, for example, the claimant testified that the defendant never gave him instructions on how and when to clean the defendant’s platform, but the defendant’s employee testified that he did give the claimant such “specific cleaning instructions.” Brown, 984 F.2d at 677. This conflicting evidence created a material fact issue about what really happened: “Who gave Brown instructions on how and when to clean the platform?” Id. at 679.

Here, the parties do not dispute the facts. They dispute whether the undisputed facts establish that the Ruiz factors support W & T’s assertion that Fredieu was its borrowed employee. But that dispute does not create a fact issue that a jury must resolve. “A dispute over whether one is a borrowed servant ... could still exist although all the facts were stipulated, for it concerns not only the facts themselves but the implications to be drawn from the facts.” Gaudet, 562 F.2d at 358.

The parties’ dispute over whether the undisputed facts support a Ruiz factor or establishes that Fredieu was W & T’s borrowed employee merely creates the question of law that the trial court had to decide. See, e.g., Ruiz, 413 F.2d at 312–13 (“We have, however, carefully studied the record and find no element of control by National.”); see also Lomeli v. Sw. Shipyard, L.P., 363 S.W.3d 681, 688 (Tex. App.—Houston [1st Dist.] 2011, no pet.) (concluding that the control factor weighed in favor of borrowed-employee status despite some undisputed evidence suggesting a lack of control). Fredieu “cannot generate a factual dispute merely by contesting the conclusion reached by the court, rather [he] must show that genuine disputes exist over enough determinative factual ingredients to make a difference in this result.” Gaudet, 562 F.2d at 358.

*16 Furthermore, even if the parties had submitted conflicting evidence that created a genuine fact issue relevant to one or more of the Ruiz factors, W & T’s failure to obtain jury findings resolving those fact issues would not necessarily compel the conclusion that Fredieu was not W & T’s borrowed employee. See id. (“[T]he trial court could have concluded that the test for borrowed employee status was met regardless of the ultimate resolution of the factual matter of the agreement between the employers.”). Even assuming that disputed facts were resolved in favor of the claimant, if the totality of the circumstances nevertheless establishes the claimant’s borrowed-employee status, the court may answer that question of law without requiring a jury to resolve those disputed facts. See Billizon, 993 F.2d at 106 (“Even if we assume that factor 3 weighs in favor of Billizon’s position, the summary judgment record establishes that Billizon was Conoco’s borrowed employee.”); see also Lomeli, 363 S.W.3d at 694 (holding that, even assuming one factor weighed against the claimant’s borrowed-employee status and another was neutral, judgment for the defendant was proper because “the remaining factors weigh in favor of borrowed employee status”). Under those circumstances, the disputed but undetermined facts would simply be “immaterial” and would not prevent the court from deciding the question of law. Reliance Nat’l Indem. Co. v. Advance’d Temps., Inc., 227 S.W.3d 46, 50 (Tex. 2007).

The Fifth Circuit “will not insist upon the expense and delay of a trial if the overall issue can be resolved through a preponderance of other factual matters not in dispute.” Gaudet, 562 F.2d at 358; see also Brown, 984 F.2d at 678 n.5 (“[T]he terms of a contract and the related factual issues do not automatically prevent summary judgment or directed verdict. If the remaining borrowed employee factors overwhelmingly point to borrowed employee status, a summary judgment or directed verdict is appropriate.”); Capps v. N.L. Baroid-NL Indus., Inc., 784 F.2d 615, 617 (5th Cir. 1986) (“[I]f sufficient basic factual ingredients are undisputed, the court may grant summary judgment.”). Neither should we. The parties’ evidence in this case did not create any genuine factual issues, and even if it had, the trial court could have decided the question of law without obtaining jury findings on those issues if the disputes were ultimately immaterial in light of the totality of the evidence. W & T’s failure to obtain jury findings did not prevent the trial court from answering the question of law or require W & T to “conclusively establish” any of the Ruiz factors, either in the trial court or on appeal.

IV.

Fredieu’s Employment Status

Applying the proper standard of review, our task in this appeal is to decide de novo whether W & T met its burden to establish that Fredieu was its borrowed employee. Considering the totality of the evidence in light of the Ruiz factors, I agree with the trial court’s conclusion that it did.

The undisputed evidence establishes that Fredieu was employed by and received his paychecks from the Wood Group. But he was assigned by the Wood Group to work for W & T pursuant to a Master Services Contract between those two employers. For at least fifteen months before his injury, Fredieu lived and worked on offshore platforms owned by W & T, and worked under the direction of a W & T supervisor. On the day of his injury, the W & T supervisor instructed Fredieu to travel with a group of other contractors’ employees to a different, unoccupied platform to perform painting work and repair handrails. While on that platform, Fredieu discovered that a regulator appeared to be malfunctioning, and he reported that discovery to W & T by radio. The W & T supervisor instructed Fredieu to remove the regulator and bring it back to him on the other platform. Still using the radio, the W & T supervisor instructed Fredieu on the steps he should take to perform a safety check and eliminate pressure in the pipes connected to the regulator. Although Fredieu followed the W & T supervisor’s instructions, an explosive release of pressurized gas occurred, flinging a pipe that struck Fredieu in the arm, causing significant fractures that required surgical repairs. Fredieu filed a claim for workers-compensation benefits under W & T’s insurance policy, and he received and accepted those benefits for several months, until they were suspended because he failed to attend numerous follow-up appointments.

*17 Using the Ruiz factors to guide our analysis of the undisputed evidence, Fredieu concedes that he was performing work for W & T when he was injured (factor 2), that he acquiesced in and agreed to his assignment to work for W & T (factor 4), that he worked for W & T for a lengthy period of time (factor 7), and that W & T had the right to terminate his work on W & T’s platforms (factor 8). The trial court, the court of appeals, and the Court today have all agreed that the undisputed facts regarding these four factors support the conclusion that W & T was Fredieu’s true employer at the time of his injury. The parties and the courts dispute whether the undisputed evidence relating to the remaining Ruiz factors also supports that conclusion.

The third Ruiz factor requires us to consider the evidence relating to the nature of the agreement between W & T and the Wood Group regarding Fredieu’s employment status. See Gaudet, 562 F.2d at 355–56. As the Court explains, the Master Services Contract provided that the Wood Group’s employees who worked for W & T would not be considered to be W & T’s employees, but another provision required W & T to obtain workers-compensation insurance covering the Wood Group’s employees and expressly provided that the Wood Group’s employees would be deemed to be W & T’s borrowed servants. Ante at ––––. The Court concludes that these potentially conflicting contractual provisions create an “unresolved material fact question.” Ante at ––––. But the construction of a contract presents a question of law, not a fact issue. URI, Inc. v. Kleberg County, 543 S.W.3d 755, 763 (Tex. 2018). I would conclude that, although the agreement does not completely or overwhelmingly weigh in favor of establishing Fredieu’s status as W & T’s borrowed employee, the fact that W & T and the Wood Group specifically agreed that Fredieu would be covered by W & T’s workers-compensation policy and deemed to be W & T’s borrowed servant in that context provides substantial support for that conclusion.

The fifth Ruiz factor addresses evidence whether Fredieu essentially ceased being the Wood Group’s employee during the time he worked for W & T. See Gaudet, 562 F.2d at 355. Again, the parties do not dispute any of the facts that are relevant to this analysis; instead, they dispute whether the undisputed facts relevant to this factor support a finding that Fredieu was W & T’s borrowed employee. The undisputed evidence established that while Fredieu was working for W & T, the Wood Group retained the authority to reassign him to a different platform or to a different customer and continued to provide him with training, work clothes, and equipment. But the undisputed evidence also established that during that time, the Wood Group never exercised the reassignment authority and never gave Fredieu instructions on how to perform his work for W & T. Overall, I agree with Fredieu that the Wood Group did not completely terminate its relationship with Fredieu, but it certainly surrendered much of the typical employer-employee relationship to W & T.

The sixth Ruiz factor instructs us to consider evidence whether W & T furnished Fredieu’s workplace and the tools he needed for the job. See Gaudet, 562 F.2d at 355. Fredieu concedes that W & T furnished his workplace. The undisputed evidence established that Fredieu and the Wood Group furnished most of his tools and clothing (hard hat, work shirts, jacket, safety glasses, gloves, boots, wrenches, and pliers), but W & T provided other tools and equipment that Fredieu needed to perform the work W & T assigned him (tubing, fittings, bolts, and other wrenches). I agree with the Court that overall, this factor does not clearly favor either party. See ante at ––––.

The ninth Ruiz factor asks whether W & T or the Wood Group was obligated to pay for Fredieu’s services. See Gaudet, 562 F.2d at 355. The trial court and the court of appeals both concluded that this factor supports a determination that Fredieu was W & T’s borrowed employee, but the Court disagrees. The undisputed evidence established that Fredieu maintained time cards for the work he performed for W & T, that W & T reviewed and approved the time cards and submitted them to the Wood Group, that the Wood Group issued invoices to W & T based on the time cards, that W & T paid the invoices to the Wood Group, that the Wood Group paid Fredieu, and that the Wood Group would accept and implement any salary increase W & T wanted to provide for Fredieu because W & T would be the one to “pay for it.” The Court concludes that this evidence “favors Fredieu” because his paychecks came from the Wood Group, he believed the Wood Group was obligated to pay him, and no evidence established that the Wood Group’s obligation was dependent on W & T first paying the Wood Group. Ante at ––––. I agree with the trial court and the court of appeals that the evidence related to this factor favors W & T. Without regard to the Court’s hypothetical, the undisputed evidence established that W & T was contractually obligated to pay for Fredieu’s services and in fact did pay for them based on the hours he worked for W & T.4

*18 Finally, the first Ruiz factor, which the Fifth Circuit has generally suggested is “central to” the analysis but not necessarily “dispositive,”5 addresses the evidence regarding the amount of control that W & T had over the work Fredieu was performing when he was injured. The undisputed evidence establishes that W & T instructed Fredieu to travel to the platform to perform painting work and repair handrails. When Fredieu discovered the malfunctioning regulator, he reported it to his W & T supervisor because, as he testified, “any time I, you know, tampered with [W & T’s] equipment or was going to go into working on it, something like that, it’s theirs, so I have to call and let him know what my findings were and how he wanted to go about fixing it.” Fredieu attempted to remove the regulator because the W & T supervisor instructed him to remove it and bring it back to the other platform. The W & T supervisor gave Fredieu step-by-step instructions on how to perform a safety check and to remove the regulator, although he did not cover all the specific steps.

It is also undisputed that no one from W & T was on the platform when the accident occurred, and that Fredieu generally controlled his own work for W & T on a day-to-day basis with little to no direction or supervision from W & T. But Fredieu does not claim that he was his own employer, and certainly, as between W & T and the Wood Group, W & T acted as Fredieu’s employer and exercised whatever supervisory control Fredieu required. And even Fredieu admits that, when the accident occurred, he was “just doing as [he] was told” by the W & T supervisor. These facts support the conclusion that W & T exercised substantial supervisory control over the work Fredieu performed on W & T’s behalf.

The undisputed evidence in this record does not overwhelmingly establish that each of the nine Ruiz factors completely supports the conclusion that Fredieu was W & T’s borrowed employee. But none of the factors is “decisive, and no fixed test is used to determine the existence of a borrowed-servant relationship.” Ruiz, 413 F.2d at 312. In the end, our task is to determine whether, as a whole, the totality of the evidence demonstrates that W & T was not just a third party for whom Fredieu was providing services, but was in reality Fredieu’s “true employer” such that limiting his recovery for a work-related injury would support the policies underlying the federal workers-compensation system. See Gaudet, 562 F.2d at 357. Under these facts, I agree with the trial court that Fredieu was W & T’s borrowed employee.

V.

Conclusion

Whether Fredieu was W & T’s borrowed employee presents a question of law. The trial court thus erred by submitting that question to the jury, but it corrected that error by disregarding the jury’s answer and deciding the question itself, considering the evidence presented in light of the Ruiz factors. W & T did not have to “conclusively establish” Fredieu’s status as a borrowed employee in the trial court, either to justify the court’s decision to disregard the jury’s answer or to prevail on the question of law. Nor does W & T have to demonstrate in this Court that it conclusively established Fredieu’s borrowed-employee status to uphold the trial court’s judgment in its favor. Under the appropriate standard of review, we must decide the question of law de novo. Reviewing the evidence in light of the Ruiz factors, I conclude that Fredieu was W & T’s borrowed employee and thus cannot recover on his tort claims against W & T. Instead, his remedy was limited to the workers-compensation benefits he requested and received before he filed this suit. I would reverse the court of appeals’ judgment and reinstate the trial court’s judgment in W & T’s favor. Because the Court holds otherwise, I respectfully dissent.

Footnotes

1

“While Texas courts may certainly draw upon the precedents of the Fifth Circuit, or any other federal or state court, in determining the appropriate federal rule of decision, they are obligated to follow only higher Texas courts and the United States Supreme Court.” Penrod Drilling Corp. v. Williams, 868 S.W.2d 294, 296 (Tex. 1993). Thus, this Court is not formally bound by the Fifth Circuit’s understanding of the LHWCA or by its view that borrowed-employee status is a question of law. Nor are we bound to apply the Fifth Circuit’s Ruiz factors, which not all federal courts apply. See, e.g., White, 222 F.3d at 150 (Wilkinson, J.) (rejecting the Ruiz factors because “[a] nine-part probe provides insufficient guidance to prospective litigants about the application of a legal standard, as the Fifth Circuit itself has intimated”). The parties do not acknowledge that state courts are free to depart from federal appellate precedent interpreting the LHWCA. Instead, they assume the Fifth Circuit’s application of Ruiz’s nine factual inquiries is the appropriate framework for determining borrowed-employee status. We will make the same assumption. While we hold that borrowed-employee status is a legal question for the court, we reach no conclusions about the utility of the Ruiz factors. If asked to do so, we would be reluctant to depart from the Fifth Circuit’s approach to the LHWCA, which would allow parties in Texas to choose how the statute will be applied merely by choosing a court system. But, the parties have not briefed the relative merits of alternatives to the Ruiz factors, which federal courts do not universally apply. We decide the case as the parties present it and make no holdings on matters not in dispute.

2

The trial court disregarded the jury’s verdict as immaterial. It concluded that “W & T Offshore failed to obtain any jury findings on any individual [Ruiz] factors” and that “the Court may make a finding on any omitted factors for which there is conflicting evidence.” It then made its own written factual findings on the individual Ruiz factors pursuant to its reading of rule 279 of the Texas Rules of Civil Procedure. The court of appeals held that the trial court did not have authority to make its own findings under rule 279, which governs omission of elements of grounds of recovery and defenses, not factors weighed by courts in determination of legal questions. See TEX. R. CIV. P. 279. W & T does not raise that issue in this Court or otherwise argue that the trial court properly made its own fact-findings in place of the jury.

3

W & T argues in the alternative that if fact issues concerning disputed Ruiz factors remain, the proper remedy is a remand for a jury to resolve them. It relies on the Fifth Circuit’s opinion in Brown v. Union Oil Co. of California. In that case, the trial court granted a directed verdict to Union after determining that Brown was Union’s borrowed employee. See Brown, 984 F.2d at 676. The Fifth Circuit reversed and remanded for a new trial because fact issues needed to be resolved related to the Ruiz factors. See id. However, in Brown, unlike this case, no jury trial had been completed prior to the remand. The district court granted a directed verdict after the close of evidence but before the jury was charged. See Brief of Plaintiff-Appellant at 5, Brief of Defendant-Appellee at 1, Brown, 984 F.2d 674. Here, prior to charging the jury, both Fredieu and W & T moved for directed verdicts on the issue of Fredieu’s borrowed-employee status. Both motions were denied. W & T was thus on notice that there were material issues of fact related to the borrowed-employee question that needed to be resolved by the jury. W & T did not request jury findings related to the Ruiz factors, however, and the jury was charged without submission of any fact issues related to borrowed-employee status. A party who fails to obtain findings necessary to establish its claim or defense is not automatically entitled to a remand for a new trial on those issues. Horizon Health Corp. v. Acadia Healthcare Co., 520 S.W.3d 848, 882 (Tex. 2017). It was W & T’s burden to submit those issues and secure any necessary findings from the jury in order to prove its borrowed-employee affirmative defense. It did not do so, and it is not entitled to a remand.

4

See, e.g., White, 222 F.3d at 150 (Wilkinson, J.) (rejecting the Ruiz factors because “[a] nine-part probe provides insufficient guidance to prospective litigants about the application of a legal standard, as the Fifth Circuit itself has intimated”).

5

The dissent concludes that the trial court correctly resolved the borrowed-employee question in W & T’s favor by balancing all the evidence and deciding the legal question of borrowed-employee status for W & T. The trial court, however, did not consider itself at liberty to simply look at the totality of the evidence and make a call. Instead, the trial court acknowledged the need for a fact-finder to resolve genuinely disputed Ruiz factors. Because the jury had not done so, the trial court made its own fact-findings on the Ruiz factors before weighing the factors and reaching an ultimate decision. Unlike the dissent, which analyzes the evidence de novo without the benefit of any fact-findings, the trial court made fact-findings and answered the borrowed-employee question in light of them. The court of appeals concluded that the trial court should not have made its own fact-findings, and W & T does not raise that issue in this Court. Thus, the findings that formed the basis for the trial court’s decision have been reversed. Only if none of the Ruiz factors was genuinely in dispute—or if the disputes on the Ruiz factors were not material to deciding the borrowed-employee question—would the dissent be correct that trial courts may proceed to analyze the evidence de novo without any predicate fact-findings. As explained above, we think multiple Ruiz factors are in genuine dispute, the dispute is material to the ultimate question, and the lack of fact-findings resolving these questions cannot be ignored.

1

See Sw. Bell Tel. Co. v. Pub. Util. Comm’n, 571 S.W.2d 503, 511 (Tex. 1978) (“It is, of course, incongruous to speak of deciding as a fact from the preponderance of the evidence a question of law.”).

2

Fredieu argues that W & T waived any complaint about the jury question because W & T itself proposed the question and did not object to its submission to the jury. W & T disputes that it proposed the question, but we need not resolve that issue. “A party need not object to an immaterial question that should not have been submitted” and preserves error by moving to disregard the answer in a post-verdict motion, as W & T did here. BP Am. Prod. Co. v. Red Deer Res., LLC, 526 S.W.3d 389, 402 (Tex. 2017).

3

See, e.g., Skipper v. A&M Dockside Repair, Inc., 430 F. Supp. 3d 170 (E.D. La. 2020) (pending appeal) (“Here, the relevant facts are not in dispute. Rather, plaintiff disputes the legal conclusion that should be drawn from the facts.”); In re Weeks Marine, Inc., 88 F. Supp. 3d 593, 601 (M.D. La. 2015) (“If some of the Ruiz factors involve fact questions, those questions must be submitted to the fact finder unless a sufficient number of other factors clearly favor summary judgment.” (citation and quotations omitted)); Robertson v. W & T Offshore, Inc., 712 F. Supp. 2d 515, 522 (W.D. La. 2010) (“[Plaintiff] merely lists the nine legal factors comprising the borrowed employee analysis as set forth in [Ruiz] ... [but] does not provide any evidence with respect to the underlying facts as they relate to the Ruiz factors.”); Bourgeois v. W & T Offshore, Inc., No. 13-294, 2013 WL 4501326, at *3 (E.D. La. 2013) (“The parties disagree on the application of the first factor to this case, but the following facts are undisputed.”).

4

The Fifth Circuit under similar facts has deemed this factor as favoring borrowed-employee status even at the summary-judgment stage. See Billizon, 993 F.2d at 105 (“D & C paid Billizon, but his pay was based on time tickets verified by Conoco.”); Brown, 984 F.2d at 679 (“Gulf Inland paid Brown, but his pay was based on time tickets that had to be verified daily by Union.”); Capps, 784 F.2d at 618 (“Baroid in essence paid Capps” when “Davis had the obligation to pay Capps, [but] Davis received the funds to pay Capps from Baroid.”).

5

See Brown, 984 F.2d at 676–77; Melancon v. Amoco Prod. Co., 834 F.2d 1238, 1245 (5th Cir. 1988); West v. Kerr-McGee Corp., 765 F.2d 526, 530–31 (5th Cir. 1985); Ruiz, 413 F.2d at 312–13.

Supreme Court of Texas.

Tommy YOWELL, et al., Petitioners,

v.

GRANITE OPERATING COMPANY and Apache Corporation, et al., Respondents

No. 18-0841

|

Argued January 9, 2020

|

OPINION DELIVERED: May 15, 2020

Opinion

Justice Busby delivered the opinion of the Court.

*1 This dispute over the continuing validity of an interest in a mineral lease requires us to decide issues regarding the rule against perpetuities, the scope of an indemnity agreement, and recovery of appellate attorneys’ fees. Among the two petitions, there are four issues presented: (1) whether a reserved overriding royalty interest (ORRI) in a lease that includes an anti-washout provision extending the interest to new leases violates the rule against perpetuities (the Rule); (2) whether Texas Property Code section 5.043 mandates judicial reformation of a commercial instrument creating a property interest that violates the Rule; (3) whether an indemnity agreement covers a particular suit; and (4) whether sufficient evidence supports the appellate attorneys’ fees awarded. The court of appeals held the ORRI in new leases violated the Rule and was not subject to reformation under the Property Code. The court further held that the indemnity agreement was not invoked and evidence supported the award of attorneys’ fees.

We hold that the ORRI is a real property interest that violates the Rule and must be reformed, if possible, in accordance with section 5.043 of the Property Code. We therefore reverse the court of appeals’ judgment in part and remand for that court to consider whether the ORRI in new leases may be reformed to comply with the Rule, as well as any other grounds for summary judgment it did not reach. We affirm the court of appeals’ judgment in part on the issues of indemnity and attorneys’ fees.

BACKGROUND

A. The 1986 Lease and ORRI

Aikman Oil Corporation leased the mineral rights in a section of land in Wheeler County in 1986 (1986 Lease). Aikman later assigned its interest in the 1986 Lease to Jay Haber, reserving a 2.25% ORRI1 for itself. The ORRI reservation was subject to an anti-washout provision that purported to cover any extension, renewal, or new lease executed by Haber or his successors in interest. Through a series of conveyances, petitioners (collectively, the Yowells) obtained Aikman’s reserved ORRI in the 1986 Lease, and Upland Resources Inc. obtained Haber’s leasehold interest in the 1986 Lease.

B. The 2007 Lease, lawsuit, and settlement

In May 2007, Amarillo Production Company executed a top lease2 (2007 Lease) with the same mineral owner and covering the same property as the 1986 Lease. Just three months later, Amarillo Production sued Upland, alleging that Upland’s 1986 Lease terminated and Amarillo Production’s 2007 Lease went into effect. The parties resolved their dispute with a settlement agreement that (1) terminated Upland’s 1986 Lease, (2) initiated Amarillo Production’s 2007 Lease, (3) assigned Amarillo Production’s new leasehold interest to Upland, and (4) reserved ORRIs in the 2007 Lease for both Amarillo Production (3%) and Upland’s owner the Peyton Group (2%). The ORRIs in the 2007 Lease were subject to proportionate reduction if the Yowells successfully attached their ORRI to the 2007 Lease.

C. The Peyton Group sells the lessee and grants an indemnity

*2 Before settling the Amarillo Production dispute, the Peyton Group was negotiating the sale of Upland’s assets to Cordillera Energy Partners III, LLC, which was itself later purchased by Apache Corporation. Cordillera, concerned about the then-pending litigation between Amarillo Production and Upland, required indemnity for itself and Upland because its purchase of Upland’s assets would bring with it all the potential liability associated with the 2007 Lease dispute. Cordillera and the Peyton Group executed a sales agreement in which the Peyton Group agreed to indemnify both Cordillera and Granite Operating Company—Upland’s new corporate identity. For clarity, we refer to Granite, Upland, and Apache collectively as “Granite.”

D. The lessee stops paying the Yowells overriding royalties

Following these transactions and assignments, Granite owned Amarillo Production’s leasehold interest in the 2007 Lease, subject to a 5% ORRI reservation. Amarillo Production later conveyed its portion of the reserved ORRI to the PAC Group. As a result, the 2007 Lease was subject to the Peyton Group’s 2% ORRI and the PAC Group’s 3% ORRI.

In light of this new ownership structure for the lease of the Wheeler County property, Granite refused to continue paying the Yowells overriding royalties pursuant to the 1986 Lease, despite the Yowells’ demands. Granite took the position that the 2007 Lease negated any obligation it had to pay the Yowells because their ORRI in the 1986 Lease did not continue to the 2007 Lease.

E. History of this suit

The Yowells sued Granite to vindicate their royalty interest, seeking a judicial declaration of ownership and recovery of payments owed. Granite sued the Peyton Group and the PAC Group, seeking indemnity from liability in the Yowells’ suit. The PAC Group filed a counterclaim against Granite—which had suspended ORRI payments under the 2007 Lease—as well as a cross-claim against the Yowells to recover attorneys’ fees and to declare the Yowells did not own an ORRI in the 2007 Lease. All parties filed motions for summary judgment, agreeing on a comprehensive stipulation of facts.

The trial court denied the Yowells’ motion for partial summary judgment and request for declaratory relief, and granted Granite’s and the PAC Group’s motions for summary judgment, which were based on the Rule and other grounds. The trial court also granted summary judgment for the Peyton Group and the PAC Group, rejecting Granite’s indemnity claim. Following a bench trial on the Peyton Group’s request for attorneys’ fees from Granite, the court awarded the Peyton Group $220,396.

A divided court of appeals affirmed, disagreeing on whether the trial court erred in “dispos[ing] of this dispute, as a matter of law, based upon the rule against perpetuities and then dismiss[ing] consideration of the [reformation statute].” 557 S.W.3d 794, 810 (Tex. App.—Amarillo 2018) (Pirtle, J., dissenting). The majority held that the Yowells’ reserved ORRI violated the Rule, the assignment of the leasehold interest was not an inter vivos instrument subject to reformation under Property Code section 5.043, the statute of limitations would bar reformation regardless of section 5.043’s applicability, the Peyton Group was not required to indemnify Granite, and the evidence supported the attorneys’ fees awarded to the Peyton Group from Granite. Id. at 802–09. The Yowells petitioned for review of the adverse summary judgment on their claims. Granite filed a conditional cross-petition challenging the denial of its indemnity claim against the Peyton Group and the award of attorneys’ fees to the Peyton Group.

ANALYSIS

I. The Yowells’ reservation of an ORRI in new leases is a property interest that violates the Rule.

One of the grounds on which Granite and the PAC Group moved for summary judgment was that the Yowells’ ORRI under the 2007 Lease violated the Rule. The trial court granted their motions and invalidated the ORRI, simultaneously denying the Yowells’ competing motion for partial summary judgment against Granite. We review the trial court’s summary judgment rulings de novo. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). We take as true all evidence favorable to the nonmoving party, indulging every reasonable inference and resolving any doubts in its favor. Id. When both parties move for summary judgment, each party bears the burden to establish that it is entitled to judgment as a matter of law. City of Garland v. Dall. Morning News, 22 S.W.3d 351, 356 (Tex. 2000).

*3 The Texas Constitution prohibits perpetuities: “Perpetuities and monopolies are contrary to the genius of a free government, and shall never be allowed ....” TEX. CONST. art. I, § 26. A perpetuity is a restriction on the power of alienation that lasts longer than a prescribed period. ConocoPhillips Co. v. Koopmann, 547 S.W.3d 858, 866–67 (Tex. 2018). Our common law defines this period for real property conveyances, providing that “no [property] interest is valid unless it must vest, if at all, within twenty-one years after the death of some life or lives in being at the time of the conveyance.” Peveto v. Starkey, 645 S.W.2d 770, 772 (Tex. 1982). If a grant or devise could violate the Rule at the time the conveyance instrument is signed, the interest conveyed is void. Id. If an instrument is open to two constructions, we do not declare the interest void because it can be assumed safely that the grantor intended to make a legal conveyance. Kelly v. Womack, 153 Tex. 371, 268 S.W.2d 903, 906 (1954).

The Rule does not apply to present property interests or to future interests that vest at the time of their creation. BP Am. Prod. Co. v. Laddex, Ltd., 513 S.W.3d 476, 480 (Tex. 2017) (citing Womack, 268 S.W.2d at 905–06). “We have held that the typical oil and gas lease in Texas, which grants a lessee the right to explore and develop for a fixed term of years and as long thereafter as minerals are produced, creates in the lessee a fee simple determinable in the mineral estate that does not violate the Rule.” Koopmann, 547 S.W.3d at 867 (citing Rosson v. Bennett, 294 S.W. 660, 662 (Tex.Civ.App.—Waco 1927)).

A. The Yowells’ ORRI is both a property and a contract right.

The Rule is implicated only if the Yowells’ ORRI under a new lease is an interest in property. See id. at 867. Granite argues that because neither Granite’s predecessor lessee (Haber) nor the Yowells’ predecessor ORRI holder (Aikman) owned the mineral estate at the time they contracted to reserve an ORRI payable under future leases, those original parties could not create any property interest in future leasehold estates. According to Granite, the Yowells have only a contract right to sue Granite for failure to comply with its obligation to execute an appropriate recordable instrument evidencing the Yowells’ ORRI following Granite’s acquisition of the 2007 Lease.3

We therefore consider a preliminary question: do the Yowells have a property interest that could be subject to the Rule? If the Yowells have merely a contract right, the Rule cannot apply and the Yowells’ only form of recovery is a claim for breach of contract. If the Yowells’ interest is also a property right, however, the Rule can apply and seeking a declaration of ownership is appropriate.

We conclude the Yowells have a property interest under the 2007 Lease that could be subject to the Rule.4 An ORRI is a share of production created and paid out of a lessee’s interest under an oil and gas lease. See supra note 1. We have long held that ORRIs, like other royalty interests in production, are non-possessory property interests. See State v. Quintana Petroleum Co., 134 Tex. 179, 133 S.W.2d 112, 114–15 (1939) (citing Tennant v. Dunn, 130 Tex. 285, 110 S.W.2d 53, 57 (Tex. [Comm’n Op.] 1937) (rejecting the argument that ORRI did not create an interest in land)).5 Yet Granite argues that because a lessee is not certain to obtain a future lease, it has no vested property interest under that lease and any reservation or conveyance of an ORRI that extends to a future lease is purely contractual. We disagree.

*4 As we have observed, parties may agree to extend an ORRI beyond the lifetime of a lease. See Apache Deepwater, LLC v. McDaniel Partners, Ltd., 485 S.W.3d 900, 905 (Tex. 2016) (“Thus, in the case of a single lease, an overriding royalty ... will not survive termination of the leasehold it burdens unless the parties have expressly agreed otherwise.” (emphasis added)); Sunac Petroleum Corp. v. Parkes, 416 S.W.2d 798, 804 (Tex. 1967) (“Normally, when an oil and gas lease terminates, the overriding royalty created in an assignment of the lease is likewise extinguished.” (emphasis added)). Granite agrees that an ORRI retains its character as a property interest when it extends to the renewal of a lease, and it offers no reason why that character would not also carry forward when the ORRI extends to a new lease made to the same lessee or its successor. In each case, the ORRI holder and the lessee cannot agree among themselves that a renewal or new lease will be granted; that executive right is retained by the lessor as the reversionary owner of the mineral interest. But they can agree that if the lessee or its successor obtains a renewal or new lease covering the same property, the ORRI holder or its successor will continue to own a share of production from that property payable out of the lessee’s interest. This conclusion is not unique to ORRIs; non-participating royalty interests (NPRIs)—shares of production payable out of the lessor’s reserved royalty under a lease—can also change depending on the execution and terms of future leases. See Luckel v. White, 819 S.W.2d 459, 464 (Tex. 1991).

In sum, whether the ORRI is extended and in what form—as a share of production under a renewed lease or under a new lease involving the same land and parties—will be contingent on a leasing decision by the lessor, a non-party to the ORRI. But that contingency does not deprive an ORRI that continues under a new or renewed lease of its character as a property interest. See El Dorado Land Co. v. City of McKinney, 395 S.W.3d 798, 800–01 (Tex. 2013) (holding right to repurchase property upon occurrence of contingency was an estate in land, not merely a contractual right). Rather, the contingency means that the part of the ORRI extending to future leases was not vested at the time of its creation, which gives rise to the perpetuities problem we address below. For these reasons, we conclude the Yowells obtained a property interest under the 2007 Lease and are permitted to seek a judicial declaration regarding the continued validity of that interest.

B. The Yowells’ interest in new leases did not vest at the time of its creation.

To determine whether the Yowells’ property interest under new leases violates the Rule, we ask two questions. First, did the property interest vest at the time of its creation? Laddex, 513 S.W.3d at 480. If the answer is yes, our analysis is complete and the Rule does not apply. Id. If the answer is no, we ask a second question: must the interest vest, if at all, within the Rule’s prescribed timeframe? Peveto, 645 S.W.2d at 772. If the answer to that question is yes, then the interest does not violate the Rule and is valid. Id. If the answer is no, the interest violates the Rule. Id.

As to the first question, the owner of an interest must have “an immediate, fixed right of present or future enjoyment” for that interest to vest. Koopmann, 547 S.W.3d at 867 (citing Vest, BLACK’S LAW DICTIONARY (10th ed. 2014)). For example, a mineral interest owner’s possibility of reverter upon the expiration of a lease is not subject to the Rule because it is a future interest that vests at the time of its creation. Id. “A possibility of reverter is the grantor’s right to fee ownership in the real property reverting to him if the condition terminating the determinable fee occurs,” and it is vested because it is “a claim to property that the grantor never gave away.” Id. (cleaned up). A partial alienation of a grantor’s possibility of reverter does not violate the Rule, even when another plausible interpretation of the same conveyance results in vesting of the same interest being dependent on the expiration of an existing lease. Laddex, 513 S.W.3d at 482.

If an interest can vest only “upon the happening of a condition or event,” then it is an executory interest. Koopmann, 547 S.W.3d at 867. “An executory interest is a future interest, held by a third person, that either cuts off another’s interest or begins after the natural termination of a preceding estate.” Id. “Executory interests have historically been subject to invalidation by the Rule when they were limited upon conditions precedent not certain [to] occur, if ever, and followed a prior estate not certain to end.” Id. at 871.

*5 Applying these principles to the Yowells’ ORRI, we conclude their interest in new leases did not vest at the time of its creation and is an executory interest to which the Rule applies. The instrument reserving an ORRI under the 1986 Lease provides:

Should the Subject Leases ... terminate and in the event Assignee [the lessee] obtains an extension, renewal or new lease or leases covering or affecting all or part of the mineral interest covered and affected by said lease or leases, then the overriding royalty interest reserved herein shall attach to said extension, renewal or new lease or leases; and an appropriate recordable instrument shall be executed to evidence Assignor’s [the ORRI holder’s] overriding royalty interest therein. Further, any subsequent extension or renewal or new lease or leases shall contain a provision whereby such overriding royalty shall apply and attach to any subsequent extensions or renewal of Subject Leases.

In addition, the instrument “shall inure to the benefit of and shall be binding upon the parties hereto, both Assignor and Assignee, their respective heirs, successors, legal representatives and assigns.”

At the time this ORRI was reserved, it provided no immediate, fixed right of present or future enjoyment as to new leases because those leases were not yet in existence. Rather, the ORRI would not apply to a new lease unless the following additional events occurred: (1) the 1986 Lease terminated; (2) the lessor granted a new lease covering all or part of the same mineral interest; and (3) the new lease was obtained by a successor of Haber, the lessee at the time of the reservation.

Moreover, Aikman and Haber were lessees. Because neither was a lessor holding the possibility of reverter and the right to re-lease the Wheeler County property, neither could agree to create a vested future interest in production under new leases. Their interest is not derived from a lessor’s partial alienation of his possibility of reverter, as the interest we upheld in Laddex was. Cf. 513 S.W.3d at 480. Although this lack of ownership does not deprive the interest of its character as an interest in property, as explained above, it does prevent the interest from vesting immediately upon its creation.

The Yowells argue that Aikman’s intent was to create only one ORRI that vested at its creation. As evidence of this intent, they point to the reservation’s provision that the ORRI shall attach to new leases. In the Yowells’ view, the ORRI does not require re-vesting upon the termination of the 1986 Lease. We disagree that the parties may avoid a Rule violation by including automatic attachment language.

“Parties are free to contract for whatever division of the interests suits them. Their intent ... controls.” Wenske v. Ealy, 521 S.W.3d 791, 797 (Tex. 2017) (construing deed according to the parties’ intent as expressed in the deed’s language). Although this principle may have aided the Yowells in a claim for breach of contract, the Yowells chose not to pursue such a claim in this Court. Instead, the Yowells sought a judicial declaration that their reserved ORRI was a property interest under the 2007 Lease. Even assuming the parties intended to avoid a Rule violation by including language automatically attaching their interest to new leases, that interest simply could not vest in new leases that did not exist and that the parties to the reservation lacked the ability to create.

*6 We rejected a similar argument in Koopmann. There, Strieber granted fee simple title to the Koopmanns, reserving a one-half NPRI for a primary term of fifteen years and “as long thereafter as there [was] production in paying ... quantities.” 547 S.W.3d at 863. The Koopmanns argued their future right to Streiber’s NPRI “ ‘vested in interest’ immediately upon execution of the deed.” Id. at 868. We disagreed, holding that “because at the time of the grant the executory limitation on Strieber’s interest—lack of production in paying quantities—might not happen within twenty-one years after the death of some life or lives in being,” the Koopmanns’ interest was uncertain, constituted an executory interest, and “violated the Rule.” Id.6 The Yowells face the same reality: their interest in new leases did not vest at the time Aikman and Haber created that interest because its existence depends on the occurrence of the three uncertain events discussed above.

The Yowells’ position gains no support from Independent Gas & Oil Producers, Inc. v. Union Oil Co. of Cal., 669 F.2d 624 (10th Cir. 1982). There, the court imposed Union’s ORRI on a second lease executed after the termination of the original lease. Id. at 628. The court held that “Union’s property interest in any renewals or extensions of Lease I vested at the time of its assignment ... and the [Rule] is not operable in such a situation.” Id. (emphasis added). We agree with the Tenth Circuit’s conclusion that Union’s ORRI in renewals or extensions did not violate the Rule. See Sunac, 416 S.W.2d at 802–03 (discussing lease extensions and renewals). Whether an ORRI reservation in new leases violates the Rule was not addressed in Union Oil.7

The Yowells also cannot benefit from Luecke v. Wallace, which they cite for the proposition that a royalty interest under a lease not yet in existence vests at the time of its creation because “the royalty-interest owner [has] a present right to a share of future production.” 951 S.W.2d 267, 274 (Tex. App.—Austin 1997, no writ). We agree with this proposition for royalties payable out of the mineral estate owner’s share of production, but the same is not true for ORRIs payable out of the lessee’s share of production. In Luecke, Wallace reserved an NPRI that remained with the land irrespective of the lease’s lifetime. Id. at 270. Luecke owned the remainder of the mineral estate subject to Wallace’s interest. Id. Luecke challenged the validity of Wallace’s interest on the ground that Wallace’s reservation violated the Rule. Id. at 272. The court of appeals correctly rejected this argument because Wallace’s reservation vested at the time she created the interest. Id. at 274. Irrespective of who later leased from Luecke, those minerals were subject to Wallace’s interest. See id.

In contrast, an ORRI holder’s rights are subject to the lease’s survival according to the parties’ agreement. The holder of an ORRI under potential future leases does not have a guaranteed, present right to a share of future production; in this way, an ORRI differs from other royalty interests and cannot be presently vested at the time it is created. We conclude the language used in the Aikman-to-Haber assignment reserving an ORRI under future leases postponed the interest’s vesting and subjected the reservation to the Rule’s timeframe parameters.

C. The Yowells’ interest is not certain to vest within twenty-one years after some life in being.

*7 Because the Yowells’ ORRI under new leases did not vest at the time of its creation, we move to the second step of the Rule’s analysis, asking whether the interest must vest, if at all, within twenty-one years after the death of some life in being at the time of the reservation. Peveto, 645 S.W.2d at 772. We conclude the answer is no because the Yowells’ ORRI in new leases is contingent on three events that may not occur within the Rule’s timeframe.

First, for the Yowells’ interest in a new lease to vest, the existing lease must terminate. More specifically, the Yowells’ ORRI in the 2007 Lease cannot become effective until the 1986 Lease terminates. The 1986 Lease’s secondary term extends the lease “as long thereafter as either oil, gas, ... or other mineral ... is produced from said land hereunder.” So long as that lease produced the covered minerals in paying quantities, it could continue indefinitely. At the time the ORRI was reserved, there was no certainty the Yowells’ interest in a future lease would ever vest, let alone within the Rule’s parameters. See Laddex, 513 S.W.3d at 480 (holding that an interest “contingent on [the] expiration of a determinable-fee bottom lease, without more, generally violates the Rule”).

Second, for the interest in a new lease to vest, the mineral interest owner with the executive right to execute a new lease must actually sign a new lease—an event that may never happen. When a lease terminates, fee ownership of the mineral interest reverts to the lessor, who has the right to lease the minerals to another developer. See Koopmann, 547 S.W.3d at 867. Even if the 1986 Lease were certain to terminate within the Rule’s timeframe, which it is not, the mineral owner’s decision to sign a new lease is not certain to occur, let alone within the Rule’s parameters. This contingency “postpone[s] the vesting of [the Yowells’] interest until some uncertain future date” and violates the Rule. Peveto, 645 S.W.2d at 772.

Third, for the interest in a new lease to vest, that lease must be obtained by a successor of Haber, the lessee at the time of the reservation.8 That event is never certain to occur, and it could occur long after any new lease is signed—for example, if the lease were granted to a third party that later sold its interest to a successor of Haber. The Yowells’ ORRI in new leases therefore violates the Rule.

D. The Rule’s purpose supports invalidating the Yowells’ interest in new leases.

When an interest violates the Rule, we typically hold that the provisions of the instrument creating it are void. Koopmann, 547 S.W.3d at 868. We have declined to invalidate such an interest, however, when doing so would not serve the purpose of the Rule. Id. at 868–69.

In Koopmann, as noted above, Streiber conveyed land to the Koopmanns, reserving a one-half NPRI for fifteen years and as long thereafter as there was production in paying quantities. Id. at 863. After the Koopmanns executed a lease, but nearing the expiration of Streiber’s fifteen-year primary term, Streiber conveyed more than half of her NPRI to the Koopmanns’ lessee in an effort to incentivize the lessee to begin drilling before Streiber’s interest expired. Id. No such drilling occurred to save the NPRI held by Streiber and the lessee. Id. at 863–64.

The lessee argued that Streiber’s reservation created a future interest in the Koopmanns that was not certain to vest within the Rule’s timeframe, so the Koopmanns’ interest was void. Id. at 864. We agreed the Koopmanns had an executory interest that only vested once production ceased. Id. at 868. That interest was not certain to vest within the Rule’s timeframe, which supported holding that the Koopmanns’ interest violated the Rule. Id.

*8 Nevertheless, we held the Koopmanns could keep their interest because the Rule’s purpose would not be served by invalidating it. Id. at 872. We highlighted “dissatisfaction with the harshness of [the Rule’s] application,” which had “resulted in significant statutory modifications,” and noted another instance in which we opted not to invalidate an interest because it did not “constitute an unreasonable restraint on alienation.” Id. at 868–69 (citing Cherokee Water Co. v. Forderhause, 641 S.W.2d 522, 526 (Tex. 1982)).

We explained that the Rule’s purpose is to prevent “landowners from using remote contingencies to preclude alienability of land for generations.” Id. at 869 (citing Kettler v. Atkinson, 383 S.W.2d 557, 560 (Tex. 1964)). “[R]estraint on alienability and promoting the productivity of land is not at issue in the oil and gas context,” however. Id. We held that because Streiber’s interest “was certain to end, either because production in paying or commercial quantities ceased ... or the recoverable minerals were exhausted,” the Koopmanns’ interest was more akin to a vested remainder. Id. at 871. “It [was therefore] appropriate to hold that in this oil and gas context, where a defeasible term interest is created by reservation, leaving an executory interest that is certain to vest in an ascertainable grantee, the Rule does not invalidate the grantee’s future interest.” Id. at 873.

We limited Koopmann’s holding “to future interests in the oil and gas context in which the holder of the interest is ascertainable and the preceding estate is certain to terminate.” Id. This holding does not apply to the Yowells’ interest in new leases, which is subject to multiple contingencies not certain to occur.

Like the Koopmanns’ interest, the Yowells’ interest in new leases is an executory interest because it is conditioned upon the “natural termination of a preceding estate.” Id. at 867. The expiration of the 1986 Lease is not certain to occur at all, much less within the Rule’s “twenty-one years after the death of some life or lives in being.” Peveto, 645 S.W.2d at 772. If the natural termination of the 1986 Lease were the only contingency, Koopmann would support validating the Yowells’ executory interest.

In order for the Yowells to attach their interest to the 2007 Lease, however, additional remote contingencies beyond the natural termination of the 1986 Lease must occur. Not only must the mineral owner execute another oil and gas lease but one of Haber’s successors must also obtain that lease. These are the sort of remote and uncertain contingencies the Rule seeks to prevent. In Koopmann, we outlined a narrow exception for validating an interest even when it violates the Rule. Because the Yowells’ interest in new leases is subject to a triple contingency, it falls outside the Koopmann exception.

* * *

The Yowells’ ORRI in new leases was not vested at the time of its creation and is contingent on at least three events that may not happen at all, let alone within the lives in being plus twenty-one years stipulated by the Rule. This interest therefore violates the Rule.

II. Texas Property Code section 5.043 requires courts to reform property interests that violate the Rule when possible.

Because we agree with the court of appeals that the Yowells’ ORRI violates the Rule, we must next decide whether Texas Property Code section 5.043 can be applied to reform the reservation in order to comply with the Rule.9 The court of appeals declined to apply this statute, holding it does not reach commercial instruments and that, in any event, its use would be barred by the residual four-year statute of limitations. 557 S.W.3d at 804–05. We disagree and hold that section 5.043 is a judicial mandate to which limitations does not apply, and it requires reformation of commercial instruments creating property interests that violate the Rule.

*9 Section 5.043 provides:

(a) Within the limits of the rule against perpetuities, a court shall reform or construe an interest in real or personal property that violates the rule to effect the ascertainable general intent of the creator of the interest. A court shall liberally construe and apply this provision to validate an interest to the fullest extent consistent with the creator’s intent.

(b) The court may reform or construe an interest under Subsection (a) of this section according to the doctrine of cy pres by giving effect to the general intent and specific directives of the creator within the limits of the rule against perpetuities.

(c) If an instrument that violates the rule against perpetuities may be reformed or construed under this section, a court shall enforce the provisions of the instrument that do not violate the rule and shall reform or construe under this section a provision that violates or might violate the rule.

(d) This section applies to legal and equitable interests, including noncharitable gifts and trusts, conveyed by an inter vivos instrument or a will that takes effect on or after September 1, 1969 ....

TEX. PROP. CODE § 5.043.

A. The reformation statute extends to instruments other than trusts and wills.

Granite first argues that to qualify for reformation under the statute, the instrument must be either a trust or will. We disagree. Section 5.043 “applies to legal and equitable interests, including noncharitable gifts and trusts.” Id. § 5.043(d). The phrases “ ‘includes’ and ‘including’ are terms of enlargement and not of limitation or exclusive enumeration, and use of the terms does not create a presumption that components not expressed are excluded.” TEX. GOV’T CODE § 311.005(13). Granite’s argument that the statute applies only to gifts conveyed in a trust or will is unpersuasive because the statute merely provides examples of what constitutes a “legal or equitable interest.” The statute does not preclude reformation of other types of legal and equitable interests.

B. Corporations can make inter vivos conveyances.

Next, Granite contends the court of appeals correctly held the statute inapplicable because Aikman’s reserved ORRI was not created in an “inter vivos instrument.” PROP. CODE § 5.043(d). The court of appeals reasoned that because Aikman is a corporation and does not have a “lifetime” in the traditional sense, it can create only commercial instruments. 557 S.W.3d at 804. The court interpreted “inter vivos instrument” to require that the conveying party have a true lifetime for the reformation statute to apply, noting that a corporation’s perpetual existence is shortened only if stated in its certificate of formation. Id. We disagree with the court of appeals’ conclusion for three reasons.

First, corporations can execute inter vivos instruments—trusts, for example. The Property Code articulates different methods a “property owner” may use to create a trust. PROP. CODE § 112.001. One method is “a property owner’s inter vivos transfer of the property to another person as trustee for the transferor or a third person.” Id. § 112.001(2). Although this provision does not define either “property owner” or “person,” we know from other sections of the Property Code that a “settlor” is a “person who creates a trust.” Id. § 111.004(14) (emphasis added). And both the Property Code and the Code Construction Act define “person” to include a corporation. See id. § 111.004(10)(B) (defining person to include a corporation); GOV’T CODE § 311.005(2) (“ ‘Person’ includes corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal entity.”). Thus, a corporation can be a settlor that creates a trust by an “inter vivos transfer of [its] property.” See PROP. CODE § 112.001(2) (emphasis added).

*10 Because a corporation can make an inter vivos conveyance of property to create a trust, we decline to hold that the Legislature’s choice of the term “inter vivos” excludes corporate conveyances of property interests from the reformation statute. The court of appeals erred when it declined to reform a commercial instrument executed by Aikman—a corporation—on the ground that it lacked the ability to create an inter vivos instrument. 557 S.W.3d at 804.10

Second, the statute requires courts to “liberally construe and apply [it] to validate an interest to the fullest extent consistent with the creator’s intent.” PROP. CODE § 5.043(a). This directive weighs against “a strained or narrow construction” of the statute that would exclude virtually all commercial transactions. Kroger Co. v. Keng, 23 S.W.3d 347, 349 (Tex. 2000) (“Because we should liberally construe the Workers’ Compensation Act in favor of the injured worker, a strained or narrow construction of section 406.033 would be improper.”). The exclusion of commercial instruments from reformation is inconsistent with the statutory command to carry out the intent of an instrument’s creator as fully as possible.

Third, the amendment history of section 5.043 is informative. The Legislature enacted the reformation statute in 1969, providing that the “Act shall apply only to inter vivos instruments and wills taking effect after the Act becomes effective.” Act of June 12, 1969, 61st Leg., R.S., ch. 693, § 4, 1969 Tex. Gen. Laws 2020, 2020 (emphasis added). In 1983, the Legislature removed the word “only” from the statute’s text. Act of May 26, 1983, 68th Leg., R.S., ch. 576, § 1, 1983 Tex. Gen. Laws 3475, 3484 (codified at PROP. CODE § 5.043(d)). Granite notes correctly that the Legislature’s deletion of the word “only” in 1983 was not intended to be a substantive change. See PROP. CODE § 1.001(b)(4). But we have said before that “every word excluded from a statute must also be presumed to have been excluded for a purpose.” City of Richardson v. Oncor Elec. Delivery Co., 539 S.W.3d 252, 260 (Tex. 2018) (quoting Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 540 (Tex. 1981)). The removal of the word “only” confirms that subsection (d) is an instruction on how to apply the statute prospectively, not a scope limitation on the types of instruments it covers.

C. The reformation statute is not subject to a four-year statute of limitations.

The court of appeals offered a second reason for refusing to apply section 5.043: the Yowells’ “delay in requesting [reformation] relief.” 557 S.W.3d at 805. The court believed the four-year residual statute of limitations should apply to the reformation statute. See id. at 804–05 (citing TEX. CIV. PRAC. & REM. CODE § 16.051 (“Every action for which there is no express limitations period, except an action for the recovery of real property, must be brought not later than four years after the day the cause of action accrues.”)). We disagree.

Reformation under section 5.043 is not an “action” to which the residual statute of limitations would apply. Rather, the Legislature enacted a remedial mandate for courts to reform interests, like the one in this case, that violate the Rule. The plain language of subsection (a) supports this conclusion:

*11 Within the limits of the rule against perpetuities, a court shall reform or construe an interest in real or personal property that violates the rule to effect the ascertainable general intent of the creator of the interest. A court shall liberally construe and apply this provision to validate an interest to the fullest extent consistent with the creator’s intent.

PROP. CODE § 5.043(a) (emphasis added). The Legislature’s purposeful use of the word “shall” throughout the provision imposes a duty on courts to reform or construe property interests that violate the Rule. Id.; GOV’T CODE § 311.016(a)(2). The provision’s language shows it is an instruction to courts on how to remedy a violation of the Rule, not a cause of action subject to a statute of limitations.

The PAC Group asserts it is settled that actions for reformation are subject to a four-year statute of limitations. It also cites authority for a prohibition on reforming deeds due to the four-year statute of limitations in actions for breach of contract. But no party has pursued a cause of action for either reformation or breach of contract in this Court. As we have explained, the Yowells’ ORRI is a real property interest, and they seek a judicial declaration of ownership of that interest in the 2007 Lease. It is Granite and the PAC Group that asserted the Yowells’ interest violates the Rule, and the reformation statute simply addresses the remedy for such a violation.

For these reasons, we conclude section 5.043 applies to corporate conveyances and is not subject to a four-year statute of limitations. We therefore reverse the portion of the court of appeals’ judgment that affirmed the trial court’s summary judgment rulings on the Yowells’ claim against Granite and the PAC Group’s cross-claim against the Yowells. The parties disagree, however, about whether—and, if so, how—the Yowells’ interest in new leases can be reformed under the statute to reflect the creator’s intent within the limits of the Rule. We remand for further proceedings on this issue and any other grounds for summary judgment the court of appeals did not reach.

III. The Peyton Group was not obligated to indemnify Granite because the parties’ agreement limited the scope of indemnification.

Turning to the cross-petition, Granite contends the trial court erred in rejecting its claim—on cross-motions for summary judgment—that the Peyton Group breached its contractual obligation to indemnify Granite from the Yowells’ suit. Courts must construe indemnity agreements according to the normal rules of contract construction. Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 423 (Tex. 2000). Each party to a contract bargains for superior language, and the Court’s primary concern is “to ascertain and to give effect to the intentions of the parties as expressed in the instrument.” Ideal Lease Serv., Inc. v. Amoco Prod. Co., 662 S.W.2d 951, 953 (Tex. 1983). Furthermore, the Court may not “expand the parties’ rights or responsibilities beyond the limits agreed upon by them in the contract.” Id. Instead, courts are to construe indemnity agreements strictly in order to give effect to the parties’ intent as expressed in the agreement. Gulf Ins. Co., 22 S.W.3d at 423. “[P]hrases should have different meanings,” and parties may negotiate the language of a contractual provision to expand or limit its scope. Utica Nat’l Ins. Co. of Tex. v. Am. Indem. Co., 141 S.W.3d 198, 203 (Tex. 2004).

*12 The indemnity agreement provides that following Cordillera’s purchase of Granite, the Peyton Group will indemnify both Cordillera and Granite from “any Adverse Consequence arising from or in connection with all pending or threatened claims or causes of action asserted against [Granite] in the litigation” regarding the termination of the 1986 Lease and the beginning of Amarillo Production’s 2007 Lease. We have held that the phrase “arise out of” simply requires showing a causal connection or relation, which is a standard on the spectrum for establishing causation. Mid-Century Ins. Co. of Tex. v. Lindsey, 997 S.W.2d 153, 156 (Tex. 1999). The phrase can also mean “originating from,” which is a similarly low threshold for establishing a causal link. Plains Expl. & Prod. Co. v. Torch Energy Advisors Inc., 473 S.W.3d 296, 308 (Tex. 2015). But when parties narrow the scope of their rights and obligations purposefully, the Court must enforce the terms as expressed within the four corners of the contract. Id. at 309 (“[W]hile the phrases ‘arising from,’ ‘with respect to,’ and ‘attributable to’ may seem expansive out of context, the temporal limitations to which they are tied and other contextual clues necessarily narrow their scope and require no less than a substantial-factor relationship.”); see also Utica Nat’l Ins. Co., 141 S.W.3d at 203 (“Since the policy used different wording—‘arising out of’ versus ‘due to’ in parallel exclusions—we conclude that the phrases should have different meanings in the context of this policy.”).

Here, the parties utilized limiting language so that the Peyton Group’s obligations rose and fell with the “pending or threatened claims or causes of action asserted against” Granite in the Amarillo Production litigation. There, Amarillo Production sued Granite for trespass to try title, conversion, and debt. 557 S.W.3d at 807. The Yowells were neither a party to that suit nor involved in the pending or threatened claims asserted against Granite at that time. Id. Furthermore, the continuing validity of the Yowells’ ORRI was never at issue in that dispute, which concerned whether the 1986 Lease ceased to produce oil in paying quantities such that it terminated and Amarillo Production’s top lease went into effect. Id.

Given the defined scope of the indemnity provision, Granite was required to show more than a general connection between the Amarillo Production litigation and the Yowells’ suit against it in order to qualify for indemnity. Because the Yowells’ claims against Granite are not connected to claims asserted against Granite in the Amarillo Production litigation, we affirm the court of appeals’ judgment that the Peyton Group was not obligated to indemnify Granite for the Yowells’ suit against Granite.

IV. The Peyton Group was entitled to the attorneys’ fees awarded.

After granting the Peyton Group’s motion for summary judgment against Granite regarding breach of the indemnity agreement, the trial court held an evidentiary hearing on the issue of attorneys’ fees by agreement of the parties and awarded the Peyton Group $220,396 in fees from Granite. Id. at 807. Granite challenges two components of this award: $43,500 in contingent appellate attorneys’ fees on the claim of breach, and $46,849.60 for defending against Granite’s claim seeking a declaration of proportionate royalty reduction.

When reviewing a trial court’s award of attorneys’ fees, we must ensure the record contains sufficient evidence to support such an award. Rohrmoos Venture v. UTSW DVA Healthcare, LLP, 578 S.W.3d 469, 505 (Tex. 2019) (concluding the record lacked sufficient evidence to support the trial court’s award of attorneys’ fees). The party seeking attorneys’ fees bears the burden of proof and must supply enough facts to support the reasonableness of the amount awarded. El Apple I, Ltd. v. Olivas, 370 S.W.3d 757, 762–63 (Tex. 2012). If there is insufficient evidence in the record to uphold the trial court’s award of those fees, we must reverse. See id. at 763–64.

A. The Peyton Group offered sufficient evidence of its contingent appellate fees.

Granite argues the evidence is legally insufficient to support the trial court’s award of contingent appellate fees to the Peyton Group.11 According to Granite, because the Peyton Group’s counsel based his testimony on nothing more than ipse dixit, the trial court’s award of contingent appellate fees should be reversed.

*13 We recently elaborated on the showing an attorney must make to support an award of fees in “any situation in which an objective calculation of reasonable hours worked times a reasonable rate can be employed.” Rohrmoos Venture, 578 S.W.3d at 498. In these situations, “the fact finder’s starting point for calculating an attorney’s fee award is determining the reasonable hours worked multiplied by a reasonable hourly rate, and the fee claimant bears the burden of providing sufficient evidence on both counts.” Id. Such evidence “includes, at a minimum, evidence of (1) particular services performed, (2) who performed those services, (3) approximately when the services were performed, (4) the reasonable amount of time required to perform the services, and (5) the reasonable hourly rate for each person performing such services.” Id.

We have not previously addressed how this lodestar analysis may affect the evidence needed to support a contingent award of fees that have not yet been incurred. Granite points us to a court of appeals case citing El Apple that required an attorney to establish the reasonableness of contingent appellate fees with the same level of specificity as fees already earned. See Sentinel Integrity Sols., Inc. v. Mistras Grp., Inc., 414 S.W.3d 911, 928–29 (Tex. App.—Houston [1st Dist.] 2013, pet. denied). As we explained in Rohrmoos Venture, however, “[i]t should have been clear from our opinion[ ] in El Apple” that the lodestar analysis applies to situations “in which an objective calculation of reasonable hours worked ... can be employed.” 578 S.W.3d at 498.

That is not the situation with respect to contingent appellate fees, which have not yet been incurred and thus must be projected based on expert opinion testimony. See Ventling v. Johnson, 466 S.W.3d 143, 156 (Tex. 2015) (“An award of [contingent] appellate attorney’s fees to a party is essentially an award of fees that have not yet been incurred ....”). At the point when fees are awarded by the trial court, any appeal is still hypothetical. See id. There is no certainty regarding who will represent the appellee in the appellate courts, what counsel’s hourly rate(s) will be, or what services will be necessary to ensure appropriate representation in light of the issues the appellant chooses to raise.

Of course, this uncertainty does not excuse a party seeking to recover contingent appellate fees from the need to provide opinion testimony about the services it reasonably believes will be necessary to defend the appeal and a reasonable hourly rate for those services.12 Having independently reviewed the record, we conclude the Peyton Group’s uncontroverted evidence met that standard.

B. The Uniform Declaratory Judgments Act permits an award of fees for defending contingent claims.

Granite also argues that the fees awarded to the Peyton Group under the Uniform Declaratory Judgments Act (UDJA) were impermissible because Granite’s claim seeking a declaration of proportionate royalty reduction was not decided by the trial court due to its contingent nature. Granite observes that its claim for royalty reduction would not arise unless the Yowells first prevailed on their claims against Granite, which did not occur in the trial court. Granite contends the Peyton Group should not be awarded fees for defending against such a claim.

*14 The UDJA provides: “In any proceeding under this chapter, the court may award costs and reasonable and necessary attorney’s fees as are equitable and just.” CIV. PRAC. & REM. CODE § 37.009. The plain language of the UDJA authorizes courts to award equitable and just fees in any proceeding under the Act; it does not require the trial court to consider or render judgment on the merits of that claim. Castro v. McNabb, 319 S.W.3d 721, 735 (Tex. App.—El Paso 2009, no pet.) (“The [UDJA] does not require a judgment on the merits of the dispute as a prerequisite to a fee award.”).13

Granite points to the court of appeals’ holding in EOG Resources, Inc. v. Wagner & Brown, Ltd., 202 S.W.3d 338 (Tex. App.—Corpus Christi–Edinburg 2006, pet. denied). The EOG court affirmed a trial court’s denial of attorneys’ fees for a claim pleaded “as a separate and alternative cause of action” because it was not before the trial court due to its contingent nature. Id. at 347. But that case applied section 91.406 of the Natural Resources Code, which provides stricter parameters for an award of fees. Id.; TEX. NAT. RES. CODE§ 91.406. Section 91.406 permits an award of attorneys’ fees only “in any final judgment in favor of the plaintiff”; in contrast, the UDJA permits a fee award in “any proceeding” within its purview. Compare NAT. RES. CODE § 91.406, with CIV. PRAC. & REM. CODE § 37.009. The EOG court correctly held that the trial court could refuse to award attorneys’ fees pursuant to section 91.406 because the party’s alternative claim had not yet resulted in a final judgment. EOG Res., 202 S.W.3d at 348. The UDJA’s language is broader, permitting an award of attorneys’ fees for defending against a UDJA claim without a final judgment on the merits of that claim. CIV. PRAC. & REM. CODE § 37.009.

We affirm the court of appeals’ judgment on the issue of attorneys’ fees because there is legally sufficient evidence in the record to support the trial court’s award of contingent attorneys’ fees, and because the UDJA does not prohibit a trial court from awarding attorneys’ fees to a party defending against a contingent claim for declaratory judgment.

CONCLUSION

We affirm the court of appeals’ judgment in part regarding the indemnity agreement and attorneys’ fees. We reverse the judgment in part regarding the validity of the Yowells’ ORRI and the applicability of the reformation statute. We remand the case for the court of appeals to consider whether the Yowells’ interest can be reformed to comply with the Rule, as well as any other grounds for summary judgment the court did not reach.

Footnotes

1

An ORRI is a non-possessory “share of either production or revenue from production (free of the costs of production) carved out of a lessee’s interest under an oil-and-gas lease.” Overriding Royalty, BLACK’S LAW DICTIONARY (11th ed. 2019). “An overriding royalty interest is a non-participating interest. A royalty owner has no right and thus no ability to go onto the underlying property and drill or otherwise take action to perpetuate a lease.” Ridge Oil Co. v. Guinn Invs., Inc., 148 S.W.3d 143, 155 (Tex. 2004).

2

A top lease is “[a] lease granted on property already subject to an oil-and-gas lease. Generally, any rights granted by a top lease ... are valid only if the existing lease ends.” Top Lease, BLACK’S LAW DICTIONARY (11th ed. 2019).

3

This argument is surprising, as Granite chose to move for summary judgment on the ground that the Yowells’ ORRI in future leases is a property interest invalidated by the Rule. Granite cannot defend its victory on that motion by arguing that the Yowells have no property interest to which the Rule can apply. See Stiles v. Resolution Tr. Corp., 867 S.W.2d 24, 26 (Tex. 1993) (“[A] summary judgment cannot be affirmed on grounds not expressly set out in the motion or response.”).

4

To be sure, we recognize that the Yowells also have a contract right. The Yowells declined to pursue a claim for breach of contract in this Court. These characterizations are not, however, mutually exclusive, and the Yowells are not precluded from seeking a declaration of property ownership merely because they could have also pursued a claim for breach of contract.

5

See also Minchen v. Fields, 162 Tex. 73, 345 S.W.2d 282, 287–88 (1961) (observing that Tennant and Quintana Petroleum settled Texas law “to the effect that an oil payment of the ordinary type which undertakes either to reserve or to grant a title to a fractional share of the oil or of the leasehold estate, or which provides for a delivery of this share of the production in kind to the payee, creates a present interest in land in the payee”).

6

Koopmann went on to hold that the interest was not void, however, because it did not violate the purpose of the Rule—an issue we address below. 547 S.W.3d at 868, 873.

7

Although the Yowells view the 2007 Lease as—in substance—a renewal, they concede that our decisions categorize it as a new lease. See Sunac, 416 S.W.2d at 802–03 (defining lease renewals narrowly). We therefore need not address the distinction between the renewal or extension of a lease, on the one hand, and the creation of a new lease, on the other.

8

As the Yowells concede, their interest in new leases cannot bind parties not privy to the agreement reserving the ORRI.

9

As a preliminary matter, we reject Granite’s assertion that the Yowells waived their statutory reformation argument by failing to brief the argument adequately in the court of appeals. The Yowells’ brief requested that the court of appeals (or the trial court on remand) utilize the reformation statute if it concluded the ORRI reservation in new leases violated the Rule.

10

We do not suggest, however, that a corporation conveying an unvested interest could be used as a measuring life in applying the reformation statute. “At common law, a corporation did not qualify as a life in being.” Am. Nat. Res., LLC v. Eagle Rock Energy Partners, L.P., 374 P.3d 766, 771 (Okla. 2016) (citing RESTATEMENT (FIRST) OF PROP. § 374, cmt. h (AM. LAW INST. 1944)).

11

Granite also argues that because the Peyton Group has an obligation to indemnify Granite under their sales agreement, it is not entitled to attorneys’ fees. We reject this argument because, as explained above, the Peyton Group is the prevailing party on the indemnity issue.

12

See, e.g., Assoun v. Gustafson, 493 S.W.3d 156, 168 (Tex. App.—Dallas 2016, pet. denied) (holding there was insufficient evidence in the record to support award of contingent appellate fees when there was no testimony that “included an opinion of what a reasonable attorney’s fees would be for the services that would be necessary in the event of an appeal”); State & Cty. Mut. Fire Ins. Co. v. Walker, 228 S.W.3d 404, 408–10 (Tex. App.—Fort Worth 2007, no pet.) (holding there was sufficient evidence to support the award of appellate attorneys’ fees when the attorney testified, without contradiction from opposing counsel, what he believed “a reasonable attorney’s fee would be for the services that would ‘necessarily need to be rendered’ in the event of an appeal”).

13

See also Feldman v. KPMG LLP, 438 S.W.3d 678, 685 (Tex. App.—Houston [1st Dist.] 2014, no pet.) (adopting Castro court’s holding that the UDJA does not require a judgment on the merits as a prerequisite to a fee award); Devon Energy Prod. Co. v. KCS Res., LLC, 450 S.W.3d 203, 220 (Tex. App.—Houston [14th Dist.] 2014, pet. denied) (same); Zurita v. SVH-1 Partners, Ltd., No. 03-10-00650-CV, 2011 WL 6118573, at *8 (Tex. App.—Austin Dec. 8, 2011, pet. denied) (same).

Supreme Court of Texas.

B.C., Petitioner,

v.

STEAK N SHAKE OPERATIONS, INC., Respondent

No. 17-1008

|

OPINION DELIVERED: March 27, 2020

ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR THE FIFTH DISTRICT OF TEXAS, Benjamin N. Smith, Judge

Attorneys & Firms

Matthew Ryan McCarley, Fears Nachawati, PLLC, Dallas, for Petitioner.

W. Kenneth Paxton Jr., Attorney General of Texas Office of the Attorney General, Austin, for Respondent.

Opinion

PER CURIAM

*1 In this appeal, we consider whether a trial court’s recital in a final summary-judgment order that it considered “the pleadings, evidence, and arguments of counsel” included a late-filed response and attached evidence. The court of appeals concluded that the recital did not, and thus upheld the summary judgment without addressing its legal merit. We initially denied review. We grant rehearing, and without hearing oral argument, see TEX. R. APP. P. 59.1, we reverse the court of appeals’ judgment. We remand the case to that court for consideration of the merits of the appeal.

I

A former Steak N Shake employee, B.C., sued the restaurant and her former supervisor, alleging that the supervisor had sexually assaulted her during her employment. Steak N Shake moved for summary judgment, presenting traditional and no-evidence grounds in a combined motion.1 The trial court granted the motion.

A previous appeal to this Court dealt with statutory preemption, the ground the court of appeals relied on in first affirming the trial court’s summary judgment.2 The court of appeals had held that the Texas Commission on Human Rights Act provided the exclusive remedy for the employee’s claims, foreclosing her common law assault claim as a matter of law.3 We disagreed and reversed, holding that “where the gravamen of a plaintiff’s claim is not harassment, but rather assault, as it is here, the [Act] does not preempt the plaintiff’s common law assault claim.”4 We remanded the case to the court of appeals to consider Steak N Shake’s remaining grounds for summary judgment.5

On remand, the court of appeals outlined these remaining issues: (1) “whether, under its traditional motion for summary judgment, [Steak N Shake] established as a matter of law that B.C.’s assault claim fits within a traditional exception to the Texas Workers’ Compensation Act,” and (2) “whether, under the no-evidence motion, B.C. produced more than a scintilla of evidence on each element of her claim.”6 But the court of appeals ultimately did not decide these issues, concluding that B.C. had “failed to file a timely response to the no-evidence motion, and the record does not show the trial court considered the late-filed response.”7 In upholding summary judgment on no-evidence grounds, the court of appeals declined to consider the evidence that Steak N Shake had attached to its combined motion, including B.C.’s deposition testimony, because no timely response pointed out a fact issue raised by that evidence.8 As the court of appeals upheld summary judgment on no-evidence grounds, it did not consider the remaining legal ground—the worker’s compensation bar—urged in Steak N Shake’s traditional motion.9

*2 On rehearing en banc in the court of appeals, B.C. newly contended that she had attempted to electronically file her response on the day it was due—including 461 pages of supporting evidence—but her filing was rejected “because one of the exhibits was not formatted for optical character recognition.” B.C. contends she then re-filed her motion with properly formatted exhibits the following day, which is consistent with the file stamp appearing on her response in the record. B.C. did not move to continue the summary-judgment hearing or seek leave of court to file her response late.

Despite the tardiness of B.C.’s response, Steak N Shake filed a reply brief before the summary-judgment hearing challenging the merits of B.C.’s response. In a footnote, Steak N Shake also objected to the response as untimely. The parties agree that Steak N Shake raised its objection at the summary-judgment hearing. There is no record of the hearing or of a ruling on the objection. But in the order granting summary judgment, the trial court recited: “After considering the pleadings, evidence, and arguments of counsel, the Court finds that the motion should be granted.”

II

In its combined motion for summary judgment, Steak N Shake argued that it is entitled to judgment for several reasons, including the preemption argument we previously rejected.10 Steak N Shake also argued that no evidence exists to support any element of B.C.’s common law assault claim under direct or vicarious liability theories.11

For a traditional summary judgment, Steak N Shake, as the movant, bears the burden to conclusively establish that it is entitled to judgment as a matter of law, notwithstanding the nonmovant’s response or lack thereof.12 In contrast, a movant seeking a no-evidence summary judgment need only identify “one or more essential elements of a claim or defense ... as to which there is no evidence,” and the burden then shifts to the nonmovant to produce “summary judgment evidence raising a genuine issue of material fact.”13 If a nonmovant fails to carry this burden, then the court “must” grant summary judgment.14

At issue in this case is the timeliness of B.C.’s response. A response to a no-evidence summary-judgment motion, including any evidence opposing the motion, is due seven days before the summary-judgment hearing.15 Rule 166a(c) provides that a response must be timely filed “[e]xcept on leave of court.”16 B.C. newly argued during en banc proceedings in the court of appeals that her response should relate back to her earlier, rejected electronic filing, a position she maintains at this Court. We agree with the court of appeals, however, that B.C. waived this argument by “waiting to raise the issue until after [the court of appeals] issued two opinions based on the unchallenged assertion that her response was untimely.”17 The question before us, then, is not whether B.C. timely filed her response, but whether the trial court considered her untimely response in granting summary judgment in Steak N Shake’s favor.

“[W]here nothing appears of record to indicate that late filing of a summary judgment response was with leave of court, it is presumed [the] trial court did not consider the response.”18 Courts of appeals considering whether a trial court granted leave commonly—and correctly—examine the record for “an affirmative indication that the trial court permitted the late filing.”19 That indication may arise from “a separate order, a recital in the summary judgment, or an oral ruling contained in the reporter’s record of the summary judgment hearing.”20 So while a “silent record” on appeal supports the presumption “that the trial court did not grant leave,”21 courts should examine whether the record “affirmatively indicates” the late-filed response was “accepted or considered.”22

*3 The court of appeals in this case did so, correctly asking whether the record contains an “affirmative indication” that the trial court permitted B.C.’s late-filed response.23 But the court concluded that the recital in the order was insufficient to overcome the presumption. In her petition to this Court, B.C. contends that the trial court’s recital is sufficient—as it demonstrates that the trial court considered all the evidence, including that attached to her late-filed response. She further reasons that, had the trial court not considered B.C.’s evidence, it would not have considered any evidence in opposition to the no-evidence motion. Relying on Ridgway—as do we25—that holding does not compel trial courts to consider no-evidence motions first. We cannot assume the trial court did so here.

We nonetheless conclude that the trial court’s recital that it considered the “evidence and arguments of counsel,” without any limitation, is an “affirmative indication” that the trial court considered B.C.’s response and the evidence attached to it. The court of appeals concluded this reference “indicates nothing more than the trial court considered [Steak N Shake’s evidence] in conjunction with the traditional motion.”26 But a court’s recital that it generally considered “evidence”—especially when one party objected to the timeliness of all of the opposing party’s evidence—overcomes the presumption that the court did not consider it.27

*4 This has long been our approach when considering late-filed amended pleadings in advance of a summary-judgment hearing. Our rules provide that a party may not amend its pleadings within seven days of a summary-judgment hearing without leave of court.28 In this context, we have held that “leave of court is presumed when a summary judgment states that all pleadings were considered, and when, as here, the record does not indicate that an amended pleading was not considered, and the opposing party does not show surprise.”29

Similarly, while we presume that a trial court did not consider a late-filed response absent an affirmative indication in the record, a recital in a summary-judgment order that the trial court considered “the evidence” without qualification or limitation overcomes that presumption.30 And although Steak N Shake objected to the timeliness of B.C.’s response, it neither sought nor obtained a ruling on that objection before or after the trial court’s order; therefore, we have no basis to conclude the trial court did not consider all summary-judgment evidence on file at the time the motion was heard.

Because the trial court recited that it had considered “the pleadings, evidence, and arguments of counsel,” the court of appeals should have considered that evidence as well in its review of the trial court’s summary judgment.31 Accordingly, we reverse the court of appeals’ judgment without hearing oral argument, see TEX. R. APP. P. 59.1, and remand the case to that court to consider the merits of the summary-judgment issues it outlined in its opinion.32

Footnotes

1 Our rules provide that a party may move for a no-evidence and a traditional summary judgment in a single motion. Binur v. Jacobo, 135 S.W.3d 646, 650–51 (Tex. 2004).
2 512 S.W.3d 276 (Tex. 2017).
3 512 S.W.3d 276 (Tex. 2017).
4 512 S.W.3d at 277.
5 Id. at 285.
6 532 S.W.3d 547, 549 (Tex. App.—Dallas 2017).
7 Id.
8 Id. at 551–52.
9 Id. at 561.
10 Id. at 549.
11 Id. at 550.
12 Rhône-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 222–23 (Tex. 1999) (“The nonmovant has no burden to respond to a summary judgment motion unless the movant conclusively establishes its cause of action or defense.”).
13 TEX. R. CIV. P. 166a(i).
14 Id.
15 TEX. R. CIV. P. 166a(c).
16 Id.
17 532 S.W.3d 547, 560 (Tex. App.—Dallas 2017).
18 INA of Tex. v. Bryant, 686 S.W.2d 614, 615 (Tex. 1985)).
19 Luna v. Estate of Rodriguez, 906 S.W.2d 576, 582 n.6 (Tex. App.—Austin 1995, no writ) (applying presumption “[i]n the absence of an affirmative indication in the record that the trial court accepted the late-filed response”).
20 Neimes, 985 S.W.2d at 138 (citing TIMOTHY PATTON, SUMMARY JUDGMENT IN TEXAS § 2.02[2] (Michie 1996)).
21 Basin Credit Consultants, Inc. v. Obregon, 2 S.W.3d 372, 374 (Tex. App.—San Antonio 1999, pet. denied)).
22 Stephens).
23 K-Six Television, 75 S.W.3d at 96).
24 See Ridgway, 135 S.W.3d at 600).
25 See, e.g., Meeks v. Spencer, No. 2-05-266-CV, 2006 WL 1174229, at *4 (Tex. App.—Fort Worth May 4, 2006, no pet.).
26 532 S.W.3d at 550.
27 See Harper v. Mac Haik Ford, Ltd., No. 01-09-01144-CV, 2010 WL 2650543, at *3 (Tex. App.—Houston [1st Dist.] July 1, 2010, no pet.) (mem. op.) (holding trial court accepted late response where recital stated: “After considering the Motion, the response, the evidence presented and the arguments of counsel....”).
28 TEX. R. CIV. P. 63.
29 TEX. R. CIV. P. 63.
30 In Alphaville on this point.
31 After rejecting Steak N Shake’s argument that “B.C.’s appellate arguments are necessarily waived as a result of filing her summary judgment response one day late,” the dissenting justice went on to consider the evidence supporting B.C.’s challenge to the trial court’s summary judgment, concluding that “the trial court did not err in granting no-evidence summary judgment on B.C.’s pleaded vicarious liability theory” but that “there are genuine issues of material fact regarding B.C.’s assault claim and whether [the alleged assailant supervisor] was a vice-principal of [Steak N Shake].” 532 S.W.3d 547, 555, 559–60 (Tex. App.—Dallas 2017) (Evans, J., dissenting). Although we hold that the court of appeals erred by not considering B.C.’s summary-judgment evidence, we express no opinion on whether that evidence gives rise to any genuine issues of material fact that withstand summary judgment.
32 532 S.W.3d at 549.
Top