Premises owner's role as general contractor blocks liability

A premises owner who acts as its own general contractor and provides workers' compensation coverage to subcontractors can avail itself of general contractor status and thus is entitled to the exclusive remedy defense under the Texas Workers' Compensation Act.

Case name: Entergy Gulf States, Inc. v. Summers, No. 05-0272 (Tex. 04/03/09).

Ruling: The Texas Supreme Court ruled that a premises owner was entitled to the workers' compensation exclusive remedy defense against a negligence claim brought by a contractor's employee.

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What it means: A premises owner who acts as its own general contractor and provides workers' compensation coverage to subcontractors can avail itself of general contractor status and thus is entitled to the exclusive remedy defense under the Texas Workers' Compensation Act.

Summary: A premises owner hired a maintenance company to perform maintenance, repair and technical services at its facilities. Both companies agreed the premises owner would provide workers' compensation insurance through an owner provided insurance program.

An employee of the maintenance corporation was injured, collected benefits through the premises owner's workers' compensation policy, and then sued the premises owner for negligence. The owner argued it qualified as a "general contractor" and was therefore immune from the negligence lawsuit. Under Texas law, general contractors are protected from suits by subcontractors' employees if they meet certain criteria. The Texas Supreme Court agreed, reasoning the owner had secured general contractor status.

The court pointed out that the legislative definition of "general contractor" does not exclude a premises owner and includes a "person who undertakes to procure the performance of work or a service, either separately or through the use of subcontractors." The court reasoned that by operation of the law, an owner who subscribes to a workers' compensation policy to avoid liability should be able to take advantage of the protective aspect of the general contractor provision, as the worker is entitled to benefits under the owner's workers' compensation policy.

The court noted that the employee's own response indicated the owner had "entered into a contract with [the maintenance company] for ... various maintenance work" at the owner's plant, which are the functions of a general contractor. The court further pointed out that the public policy of the Workers' Compensation Act is to specifically protect such general contractors, who are not the direct employers of a subcontractor's employees, by allowing them to be deemed an employer and assert the exclusive remedy defense.

The Texas Supreme Court ruled in the premises owner's favor, finding it qualified as a general contractor and was entitled to assert the exclusive remedy defense.

May 14, 2009

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