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Blocking one of the few remaining pathways for employees to sue for workers’ compensation, Houston’s 1st Court of Appeals ruled on Jan. 22 that all tiers of subcontractors on a construction worksite are immune from such suits. In a case of first impression, Etie v. Walsh & Albert Co., et al., the court ruled that the statutory employer-employee relationship extends to even the lowest-tier subcontractors, including independent contractors, in protecting employers from suits, but allows injured employees to collect workers’ compensation benefits. More than 10 years ago, the Texas Legislature passed workers’ compensation reform legislation — the Texas Workers’ Compensation Act (TWCA) — to limit the ability of injured employees to file suits against their employers and instead allow employers to provide broad workers’ compensation insurance coverage for those workers. The TWCA mandates that recovering workers’ compensation benefits is the sole remedy for an employee covered by workers’ compensation insurance. But the question remained as to how far the TWCA goes in covering the lowest tier of subcontractors on a job site, according to the opinion. According to the opinion, Sheldon Etie was a subcontractor working on Enron Corp. Building No. 2 in 2001 when he was injured by a plenum that fell from the ceiling and struck him. A Walsh & Albert employee allegedly installed the plenum. Etie sued Walsh & Albert, contending the company was not a “subcontractor” but an independent contractor that was not entitled to immunity from suit. Houston’s 234th District Judge Bruce Oakley granted Walsh & Albert’s summary judgment motion and Etie appealed. In its opinion, the 1st Court wrote that the insurance policy purchased by the Clark Construction Group, the general contractor on the work site, covered all of the employees — including independent contractors — who worked on the site and made Walsh & Albert immune from suit. “We are persuaded that the purposes of the Act are best served by deeming immune from suit all subcontractors and lower-tier subcontractors who are collectively covered by workers’ compensation insurance,” wrote Justice Evelyn Keyes in an opinion joined by Chief Justice Sherry Radack and Justice Elsa Alcala. “We hold that the Act’s deemed employer/employee relationship extends throughout all tiers of subcontractors when the general contractor has purchased workers’ compensation insurance that covers all of the workers on the site,” Keyes wrote. NO CASE David Fisher, a partner in the Silsbee office of Orgain Bell & Tucker who represents Etie, is adamant that Walsh & Albert is not covered by the TWCA and that the court overstepped its bounds by ruling otherwise. “I obviously disagree with their statutory construction” interpretation, says Fisher, who plans to appeal the ruling to the Texas Supreme Court. “And what they’ve done is allow a complete employment bar like in Mississippi [and other states]. But at least in those states they do it by legislative deliberation. And so they’ve done something that our Legislature has refused to do.” Fisher says the opinion likely will have a devastating impact on pending workers’ compensation cases involving companies not considered to be “subcontractors” on a work site. “I think this opinion has a significant impact upon third-party litigation,” Fisher says. “And I would hope that it would get a lot of people’s attention in a hurry.” But Nicholas Zito, a partner in Houston’s Ramey, Chandler, McKinley & Zito who represents Walsh & Albert, says the opinion will encourage general contractors to obtain “owner-controlled” insurance in which the contractor pays a premium that is later subtracted from the bids made by subcontractors hired on a job site. That was the type of insurance used on the work site in which Etie was injured, Zito says. “Our argument was that by providing workers’ comp to everyone on the job site, that everyone would be deemed an employee of the general contractor and on one side of the coin,” Zito says. “The other is that the employee is guaranteed coverage of workers’ compensation.” While many statutory-construction issues about the TWCA are settled in case law, insurance coverage issues still remain, says Michael Maslanka, a partner in and co-chairman of the labor and employment group at Dallas’ Godwin Gruber. Etie is good news and follows the Legislature’s intent when it passed the law, he says. “The Legislature intended for as many employees as possible to be covered by workers’ comp,” Maslanka says. “This opinion does just that. This opinion gives much-needed certainty to companies in the construction industry that no matter how far you drill down as far as subcontractors, there’ll be coverage.” But Ken Molberg, a partner in Dallas’ Wilson, Williams & Molberg who is president of the Texas Employment Lawyers Association, says the opinion is another blow to injured workers. “It’s just an example of further insulating wrongdoers from responsibility,” Molberg says. “And it’s just an additional effort to shut the courthouse door to working people. “

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