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Entergy Gulf States Inc. v. Summers - A Huge Win For Property Owners At The Cost Of Workers

When the Texas Supreme Court upheld the ruling in the Entergy case on rehearing in 2009, it was a huge win for property owners to the detriment of injured workers. The failure of the state legislature to pass a law overturning the Entergy decision that same year seemed to signal defeat for those hoping to protect the rights of injured contract workers to fair compensation for their injuries.

However, the fight over third-party liability for workplace injuries in Texas appears to be far from over. With the Workers' Compensation Division up for their sunset review this year, legislators who want to see changes to third party liability rules in Texas may have just the opportunity they need to get it done.

Entergy Gulf States Inc. v. Summers

In the Entergy case, the Texas Supreme Court upheld a ruling that allowed property owners to insulate themselves from lawsuits by injured contract workers so long as the property owner had purchased workers' compensation insurance for the contract workers. Thus, after Entergy, workers' comp benefits are the only remedy available to contract workers who suffer on-the-job injuries such as industrial accidents; they are not allowed to take separate legal action against the owner of the property where they injuries occurred, regardless of how grossly negligent the property owner's conduct may have been.

Prior to Entergy, only employers and general contractors were afforded immunity from personal injury suits by injured workers who were covered by workers' comp insurance. In some cases, injured workers still had the option of filing a third party liability claim against property owners and others who may have shared responsibility for their injuries.

The Entergy ruling changed the landscape of third party liability claims in Texas by extending immunity to property owners who act as their own general contractors and directly hire subcontractors to perform services on their properties, like routine maintenance.

Members of the state legislature tried to overturn the Entergy ruling in 2009. Arguing that the Court's interpretation of the Texas Workers' Compensation Act did not comport with the legislature's intent, a bill was introduced into the House and passed. However, HB 1657 later died on the Senate floor after failing to garner the 21 votes necessary to bring the bill for a vote.

Ruling Hurts Most Severely Injured Workers

The problem with the Entergy ruling is that it hurts those who already are the most vulnerable and have the most to lose - injured workers. In some cases, workplace accidents can result in catastrophic injuries that require long-term care. The benefits provided by workers' compensation are not enough to pay a severely injured person's medical expenses, let alone fully compensate him or her for all of her losses.

For example, if the Entergy decision had been in effect in 2005 during the BP plant explosion in Texas City, BP would have been able to escape liability for the contract employees who were injured so long as BP had taken out a workers' compensation policy for them. Those families who lost their primary breadwinners would have been left only with workers' comp benefits to help them pay their medical bills and other living expenses. Given that workers' compensation only pays benefits for a limited amount of time at a rate of two-thirds of the injured worker's regular wages, such a minimum benefit would do little to help those who suffered incapacitating injuries that may have prevented them from returning to gainful employment for some time.

Likewise, if the 2010 BP oil rig explosion had occurred in Texas waters rather than in federal ones, then the same thing would have held true: the 17 people who were injured offshore drilling would have been limited to recovery from the workers' compensation system so long as the owner of the oil rig, Transocean, had obtained a workers' comp policy for the contract workers.

The ruling in Entergy creates a patently unfair and punitive system for workers who depend on their employers and those who have ownership over the premises where they work to provide a safe work environment for them. Without the possibility of legal action, there is no real incentive for property owners to take every step necessary to provide safe working conditions. Similarly, there is no available legal remedy to hold these same property owners accountable for their failure to maintain a safe workplace - except in cases when a worker dies. It is only then that the families can file a suit to recover damages for their loved one's wrongful death. But even in these cases, their recovery may be limited to punitive damages.

Possible Changes to Third Party Liability in 2011

Whether the Entergy decision will remain intact past 2011 is questionable. The Workers' Compensation Division is one of the agencies up for review under the state's Sunset Provision this year, providing a new opportunity for opponents of the Entergy decision to take action to repeal it and to make other changes to third party liability rules and the workers' compensation system.

One of the biggest concerns among workers' rights advocates is what happens to workers who suffer catastrophic injuries in a work accident. Increasing the amount of workers' compensation benefits for those with catastrophic injuries is one of the potential changes that has been discussed. Others have suggested that rather than increasing workers' comp benefits, it would be better to allow those with catastrophic injuries to opt out of the workers' comp system altogether and give them the option to file a civil lawsuit.

Only time will tell what action, if any, the legislature will be able to take against Entergy. On public policy grounds, the ruling should be legislated against because it removes any incentive for property owners to provide safe work environments for their employees and contract workers.
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The Voss Law Firm, P.C. represents clients on a local, national and international basis. We proudly serve companies and individuals along the Gulf Coast and around the globe on a contingency fee basis. Our law firm collects nothing unless we recover on our client's behalf.

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