Mandatory enrollment in OCIP blocks suit by subcontractor's employee
Case name: Funes v. Eldridge Electric Co., No. 04-08-00006-CV (Tex. Ct. App. 10/01/08).
What it means: Under Texas law, when a general contractor supplies or makes available workers' compensation insurance by requiring that each of its subcontractors enroll in the available "owner controlled insurance program," the general contractor becomes the statutory employer for purposes of the Workers' Compensation Act. As a result, an employee of one subcontractor cannot sue another subcontractor for his personal injuries, as workers' compensation provides the exclusive remedy.
Summary: An employee of a drywall company was injured when he stepped on a pipe that was left on the floor of a construction site by an employee of an electric company. Both companies were subcontractors on a renovation project. The general contractor for the project required all of its subcontractors to enroll in an OCIP, which provided workers' compensation insurance coverage for all of the subcontractors and their employees. The injured worker received workers' compensation benefits but also sued the electric company for his personal injuries. The Court of Appeals held that the exclusive remedy provision of the WCA protected the electric company from the personal injury suit. It upheld the trial court's award of summary judgment in favor of the company.
The worker argued that the general contractor was not the statutory employer of the subcontractors because it did not provide workers' compensation insurance to them directly. The Court of Appeals disagreed, stating that "where, as here, the premises owner has implemented an owner controlled insurance program and contractually binds its general contractor to require all subcontractors to enroll in the OCIP, to hold that the general contractor did not 'provide' the insurance would preclude protection of the general contractor," contrary to what the Legislature intended. Because the general contractor made the insurance available to the subcontractors, it "provided" it under Texas law, thereby qualifying it as the statutory employer under the WCA.
November 17, 2008
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