Workers’ compensation systems across the United States have been designed with a primary objective of controlling costs on significant injury claims.  If Gail’s back is broken, or she suffers a leg amputation, or Gail otherwise needs to miss a couple of weeks from work due to an on-the-job injury, the workers’ compensation system ensures that Gail receives some recovery... but not too much.  The statutory promise of benefits for Gail is carefully proscribed by state statute, and Gail’s employer receives immunity from negligence liability – even when the employer’s intentional failure to maintain a safe workplace caused the injury.  This tradeoff of limited statutory benefits (the employee’s “Exclusive Remedy”) in exchange for employer immunity is commonly referred to as the “Grand Bargain”. ^[1]  Over the course of more than 100 years, this concept has bred layers-upon-layers of complexity designed to ensure that workers receive the limited benefits available. ^[2]

A new Texas court of appeals decision confirms that the Exclusive Remedy Rule prohibits an injured worker from receiving any additional damage payments for employer negligence, unless:

1. Gross negligence death claims.  The family of the injured worker can demonstrate that the workers’ death on the job was caused by the employer’s gross negligence; or
2. Injury was “substantially certain” to occur. The employee can demonstrate that the employer should be held liable because injury was substantially certain to occur.

On January 23, 2018, the Texas 14^th Court of Appeals ruled in the case of Berkel v. Lee that an injured worker covered by workers’ compensation cannot collect $43.5 million that a jury awarded him in a negligence suit, unless he proves the employer knew with “substantial certainty” that its conduct would harm him.

In this case, the employer ^[3] was installing pilings for an office building foundation. The first two steps of the installation process involved drilling a hole in the earth, then pumping grout into the hole.  The employer’s safety policies required the crew to begin a new piling only if it had enough grout to fill the entire hole. This policy was violated when a supervisor forcefully took charge of the work site and insisted that the work be completed on schedule.  When the drill auger (connected to a crane) got stuck in a hole and the crane began to show signs of overload, he was warned by the crane operator and another employee that it would be unsafe to continue.  But the supervisor ignored these warnings and yelled to the crane operator, “Pull it out! Pull it out!”

The crane became overloaded and its boom snapped in half, toppling over a series of 150-foot columns that had been installed at the work site. One of the columns landed on Tyler Lee’s left leg, crushing it and severing the leg below the knee.  

Lee received workers’ compensation benefits and sued his employer in civil court. A jury awarded him approximately $35 million in actual damages and $8.5 million in punitive damages due to the employer’s “gross negligence”.  The employer then appealed, claiming immunity from civil suit under the workers’ compensation Exclusive Remedy Rule.

On appeal, the court confirmed that a “substantial-certainty” standard applied to this case, not the “gross negligence” standard that was used by the jury.  The gross negligence standard only applies to employee death claims seeking to avoid the Exclusive Remedy Rule.

To prove gross negligence in a death claim, the workers’ family must show that the employer was knowingly reckless. To pass the much tougher “substantial-certainty” test, workers must prove their employer’s conduct was almost definitely going to cause harm “to a particular victim, or to someone within a small class of potential victims within a localized area”.

The 14th Court of Appeals wrote that Lee could sue his employer only if he could prove the supervisor had known his actions were substantially certain to injure Lee specifically, or people within a “localized area” of Lee.  If he could prove that, his case would fall under that “substantial-certainty” exception to the Texas workers’ compensation Exclusive Remedy Rule.

The court made clear that an injured worker cannot recover anything more than statutory Texas workers’ compensation benefits even when an employer knowingly permits a hazardous work condition to exist; or that the employer knowingly ordered the worker to perform an extremely dangerous job; or that the employer willfully failed to furnish a safe place to work; or even that the employer willfully violated a safety statute.  “These actions may set the stage for a finding of negligence or gross negligence, but to make that extra step on the liability continuum – i.e., to move beyond foreseeability to substantial certainty” – the employer must know the injury was “necessarily an incident to, or necessarily a consequential result of the [employer’s] action.”  Having clarified this long-unsettled area of law, confirming protections under Texas workers’ compensation for even the most unsafe and reckless of employers, this case was remanded back to the trial court for decision.

Related articles of interest:

∙ Re-imaging the Grand Bargain Without Exclusive Remedy
∙ Option Industry Expands Coverage, Steps Toward Critics
∙ Texas nonsubscriber Option:  Providing better disability benefits?

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^[1] In contrast, employees of nonsubscribers to Texas workers’ compensation can typically recover medical, disability and other benefits available under the employer’s injury benefit plan, PLUS seek actual damages (including pain and suffering) and punitive damages for any employer negligence that caused the injury.  The employer cannot defend against a negligence liability claim based upon contributory negligence of the worker, assumption of risk by the worker, or negligence of a fellow employee. 

^[2] See discussions and sample reports on the “National Conversation” over workers’ compensation system dysfunction here and here.

^[3] References to the “employer” are simplified as certain relationships are not relevant to this case analysis.