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Employers who don’t subscribe to workers’ compensation insurance can ask employees to waive their right to sue over on-the-job injuries in exchange for company-paid benefits, the Texas Supreme Court said in a March 29 ruling that punts the waiver controversy to the state Legislature. The court ruled 6-2 in Lawrence v. CDB Services Inc., consolidated with Lambert v. Affiliated Foods Inc., that the Texas Workers’ Compensation Act does not clearly prohibit or clearly allow such pre-injury agreements for benefits. “And whether or not such elections should be held void on the theory that they contravene the general statutory scheme and thus violate public policy is a decision that we believe is better left to the Legislature,” Justice Harriet O’Neill wrote in the majority opinion. A Republican legislator told his colleagues in the Senate that the ruling heightens the need to pass a bill in the 2001 session to prohibit such waivers. “With this ruling, there is no incentive for an employer to be in the workers’ compensation insurance system — absolutely none,” Sen. Robert Duncan, R-Lubbock, said in a personal privilege speech on the Senate floor shortly after the supreme court released its decision. “The employers get their cake and eat it, too,” said Duncan, a partner in Lubbock, Texas’ Crenshaw, Dupree & Milam. On March 27, the Senate passed and sent to the House Duncan’s bill that would eliminate the waivers. Unless his proposal, S.B. 624, wins approval in the House before the session ends on May 28, more employers will leave the state system and the Legislature will face making workers’ compensation coverage mandatory in the 2003 session, he said. “And I may be leading the charge,” Duncan said. But Tom Morris, an Amarillo, Texas lawyer representing CDB Services, is critical of Duncan. “He’s trying to maintain his workers’ compensation practice. He’s for the workers’ compensation industry is what he’s pushing for,” alleges Morris, of counsel at Gibson, Ochsner & Adkins in Amarillo, Texas. “That’s a typical cheap shot,” Duncan says. Duncan says he does not practice before the Texas Workers’ Compensation Commission but handles some cases in which he defends nonsubscribers to the insurance. “Mr. Morris is unaware of all the work I’ve done in workers’ compensation over the years and my real concern for preserving the workers’ compensation system,” he says. Duncan served on the staff of former Sen. John Montford, who spearheaded the legislative effort to overhaul the system in 1989 to cut companies’ costs for the insurance and ensure that injured workers receive adequate benefits in a timely manner. While lawmakers didn’t make it mandatory for employers to participate in the system, the law offers an incentive to encourage participation. Under the law, if a business chooses not to carry workers’ compensation insurance, it can be sued by an injured employee and is barred from claiming that the employee was partly to blame for his injury. Justice James Baker, joined by Chief Justice Tom Phillips, said in a dissenting opinion that the court allows employers “an end-run” around the law’s carefully crafted scheme. “The court ignores its obligation to uphold those public policies and punts a well-settled issue to the Legislature,” Baker wrote. Brian Heinrich, who represents the injured workers in both cases, says the waivers are inconsistent with the intent of the Legislature when it provided in the 1989 law that nonsubscribers to workers’ compensation insurance could be subject to common-law causes of action. “We still think we’re right on the law. These waivers violate public policy,” says Heinrich, a partner in Amarillo’s Templeton, Smithee, Hayes, Fields, Young & Heinrich. “If taking this issue to the supreme court has sped up the process of the Legislature looking at it, it was a worthy cause,” Heinrich adds. Morris says the supreme court’s majority “beautifully analyzed” the case. “They simply held what I thought they had to hold, that there’s nothing in the act that bars these plans,” he says. Lewis Coppedge, general counsel for Affiliated, declines comment on the Lambert case. In a brief filed on the company’s behalf, Affiliated said it “believes that a deal is a deal and that the courts should not judicially renegotiate or destroy the parties’ bargain.” The company also asserted that it provides benefits superior to those provided under the workers’ compensation law. The supreme court affirmed 1999 rulings by Amarillo’s 7th Court of Appeals in the Lawrence and Lambert cases. Lawrence sued CDB Services after losing a leg in a 1994 bulldozer accident. Court records show Lawrence had received $209,022 through June 1998 and is eligible to continue receiving benefits until age 65. Lambert sued Affiliated Foods after his right foot was crushed in a 1993 forklift accident. He received $57,698 for medical expenses and disability compensation, according to court records. The cases reached the 7th Court after the trial courts — the 108th and the 251st district courts in Amarillo — ruled in favor of the employers without having trials. Justice Don Reavis, author of the 7th Court’s opinion in Lambert, wrote “it is not the responsibility of the courts to judge the wisdom of the policy choices of the Legislature or to impose a different policy.” Chief Justice John Boyd and Justice Phil Johnson joined Reavis in the opinion. The same three judges also ruled in Lawrence. The intermediate appellate courts have disagreed on the waiver issue, however. In 1999, San Antonio, Texas’ 4th Court of Appeals ruled in Reyes v. Storage & Processors Inc. that a worker’s waiver of all claims for on-the-job injuries in exchange for employer-paid benefits was void on public policy grounds because the company’s benefits were inferior to those available under the workers’ compensation law. Austin’s 3rd Court of Appeals reached a similar conclusion in Castellow v. Swiftex Mfg. Corp., holding that the worker’s waiver of common law rights was unenforceable because the company-paid benefits were inferior to statutory workers’ compensation benefits. “We believe that courts engaging in such a qualitative, plan-by-plan evaluation is ill-advised,” O’Neill said in the supreme court’s opinion. Such an analysis is premised on the “questionable presumption” that such benefits can be compared, she wrote. DIVORCE FEE DISPUTE In an unsigned opinion released on March 29 in Brown v. Fullenweider, the supreme court justices turned their thumbs down on a Houston lawyer’s attempt to use a provision in the Family Code for division of property to collect his fee from a client whom he represented in a divorce action. Donn C. Fullenweider, of Fullenweider & Associates, had represented Dr. Michael G. Brown in the divorce proceedings but didn’t get paid. Houston attorney Richard Countiss, who represents Brown, says his client wouldn’t pay Fullenweider’s fee because he felt he had been over-charged. At the time the final divorce decree was issued in December 1994, the disputed charges amounted to between $70,000 and $80,000, Countiss says. To collect his fee, Fullenweider filed a motion under a provision then in the Family Code that addressed the property division. The 359th District Court severed the motion from the divorce case and ruled in Fullenweider’s favor. In a 2-1 vote, the 9th Court of Appeals in Beaumont held that the divorce decree awarded Fullenweider attorney’s fees against Brown and that Fullenweider was a “party affected” by the divorce decree. Visiting Justice John G. Hill wrote the opinion in which he was joined by Chief Justice Ronald Walker; former Justice Earl B. Stover dissented. The supreme court held that Fullenweider was not a party affected by the divorce decree and that the decree didn’t award him attorney’s fees against his client. The decree merely allocated responsibility for any such fees between Brown and his ex-wife as part of the division of their marital estate, the court said. “They [the supreme court] did not say Donn could not file a separate suit,” says Fullenweider’s attorney, Billy Shepherd, a partner in Cruse, Scott, Henderson & Allen in Houston. Shepherd estimates the value of the judgment that had been before the supreme court is well in excess of $150,000. He says Fullenweider will file a motion for rehearing.

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