Apportionment and Responsible Third Parties: Can A Texas Option Employer Apportion Fault in a Negligence Claim?

By Julie Lambeth, J.D., Executive Vice President, PartnerSource

Most appellate courts agree a negligence action against a nonsubscribing employer arises out of common law. However, the Tyler Court of Appeals has again used its rogue characterization of a nonsubscriber negligence action as “action to receive workers’ compensation benefits” to strike a nonsubscribing employer’s ability to apportion responsibility to a third party.

We asked Julie Lambeth, J.D., to provide an overview of the decision of In re East Texas Medical Center, Athens, (No. 23-1039) and explanation of whether this case will be heard by the Texas Supreme Court.  For any questions you may have on this issue or others, your PartnerSource team leader is happy to discuss.

Background

In 1913, the Texas Legislature drafted the Texas Workers Compensation Act (the “Act”) and specifically stated that, with the exception for public employees, participation is generally elective. The Act states that an employer “may” elect to obtain workers’ compensation insurance. The significance of that three-letter word is undeniable -- it is the basis upon which employers in Texas can elect a responsible alternative to the workers’ compensation system by creating and utilizing their own occupational injury benefit program.  Recovery of workers’ compensation benefits is the exclusive remedy for an employee injured while working for a “subscribing employer” (that is, an employer who participates in the Texas Workers’ Compensation System). In other words, the employer is protected from employee negligence liability claims in most instances. To entice employers to participate in the workers’ compensation system, “nonsubscribers” (those employers who choose NOT to participate in the Texas Workers’ Compensation System) have the loss of exclusive remedy and exposure to simple negligence claims filed by injured employees. Furthermore, a nonsubscribing employer cannot assert the following common law defenses –

1) Contributory Negligence;

2) Assumption of Risk; and 

3) Co-worker Negligence.

The inability to assert contributory negligence prevents an employer/defendant from arguing that the employee/plaintiff was more that 50% negligent and therefore barred from recovery. While this bar does not prevent an employer/defendant from asserting that the employee/plaintiff was the sole proximate cause of his/her injury, it does allow the employee/plaintiff to recover 100% of the damages as long as some negligence is shown on the part of the employer. 

Comparative Negligence

The Texas Labor Code clearly states that a nonsubscribing employer cannot defend a claim on the basis of contributory negligence -- but can a nonsubscribing employer assert the defense of comparative negligence? Comparative negligence is a partial legal defense that reduces the amount of damages that a plaintiff can recover in a negligence-based claim based upon the degree to which the plaintiff's own negligence contributed to cause the injury. Prior case law has answered this question.

In Kroger Co. v. Keng, 23 S.W. 3d 345 (Tex. 2000), the Texas Supreme Court settled the comparative negligence defense question, holding that a nonsubscribing employer could not assert comparative responsibility as a defense because a finding of contributory negligence is the preliminary step in determining comparative negligence. The court noted that the legislature’s intent was to encourage employers to subscribe to the workers’ compensation system and to penalize those employers who chose to opt out. Allowing nonsubscribers the ability to assert a comparative responsibility defense would lessen the intended penalty. 

While the Texas Supreme Court decision in Keng affirmed the Tyler Court of Appeals’ determination, it was not for the reason cited by the lower court. The Tyler Court of Appeals reached its decision on comparative negligence by reasoning Texas law precludes the application of comparative responsibility in workers’ compensation actions, and since a negligence suit is an action to collect workers’ compensation benefits, the same bar against workers’ compensation employers should apply to nonsubscribing employers, too.  

The majority of appellate courts disagree with the Tyler Court of Appeals’ characterization of a negligence suit as an action to collect workers’ compensation benefits. Most appellate courts agree a negligence action against a nonsubscribing employer arises out of common law. However, the Tyler Court of Appeals has again used its disregarded characterization in Keng to strike a nonsubscribing employer’s ability to apportion responsibility to a third party in In re East Texas Medical Center, Athens, (No. 23-1039). 

In re East Texas Medical Center, Athens

Facts of the Case 

An emergency room nurse alleges she was struck in the back by an empty gurney pushed by an EMT. The plaintiff initially filed suit against the EMS company and the EMT, not her employer. Those claims were ultimately dismissed after the court determined that the claims fell under the Health Care Liability Act and the required expert reports had not been timely filed. The employee then amended her petition to add her employer as a defendant. 

Relying on the Texas Proportionate Responsibility Act (formerly the Comparative Responsibility Act) enabling defendants to identify and apportion fault to other potential third-party tortfeasors, the employer/defendant sought to name the EMS company and the EMT as responsible third parties. The trial court struck the designation. East Texas Medical Center appealed this ruling… to the Tyler Court of Appeals. 

The Holding 

Despite both the Texas Supreme Court and a Fifth Circuit case holding that a negligence cause of action arises from common law, the court of appeals disregarded the higher courts’ precedent, and once again held a claim against a nonsubscribing employer is an action to collect workers’ compensation benefits. And, since the Texas Proportionate Responsibility Act is not applicable to actions to collect workers’ compensation benefits, the court of appeals prohibited the employer from asserting a responsible third-party defense. 

Current Status of Case

Given the inconsistency with other appellate courts, a Writ of Mandamus was filed with the Texas Supreme Court and an emergency stay of the lower court proceedings was issued on March 15, 2024. The Supreme Court requested briefing, and a determination as to whether the court will accept the case for review is pending. 

PartnerSource Commentary

Before the creation of workers’ compensation systems, occupational injuries claims were common law claims of negligence. Workers’ compensation systems pulled occupational injury claims from the common law courts and into its own system. For the Tyler Court of Appeals to assert a claim of negligence is “an action to collect workers’ compensation benefits” ignores not only precedent, but also the history and purpose for which the workers’ compensation system was created and the difference between subscription (statutory benefits in exchange for protection against common law negligence) and nonsubscription (common law negligence). 

Furthermore, if a negligence claim is “an action to collect workers’ compensation benefits,” would the court agree that damages should be limited to statutory workers’ compensation benefits? Of course not. The penalty intended by the legislature to encourage participation in workers’ compensation was potential recovery of damages beyond those available under Workers’ Compensation.

We are hopeful the Supreme Court of Texas agrees to hear this case so that the inconsistency between the Tyler Court of Appeals and the rest of the courts of appeals is addressed.