Alvarado v. Wingfoot Enterprises

TAFT, Justice,

concurring.

I take the unusual, but not unprecedented, step of concurring with my own opinion. See Land v. State, 943 S.W.2d 144, 150 (Tex.App.—Houston [1st Dist.] 1997, no pet.) (Taft, J., concurring). I concur because, while bound by precedent, and with due deference to the courts that have taken on the same challenge before, I believe that applying the “right to control” test in this case is illogical and yields an unfair result.

Alvarado argues that the exclusive remedy provision does not prevent her from recovering against Tandem at common law because there is a fact issue whether Web, rather than Tandem, was her actual employer based on its control of the details of her work at the time of her injury. Alvarado contends she is entitled to seek dam *728 ages for her injuries from Tandem under the common law, even though she was hired by Tandem and received workers’ compensation benefits from Tandem. See Archem Co. v. Austin Indus., Inc., 804 S.W.2d 268, 269 (Tex.App.—Houston [1st Dist.] 1991, no writ).

In Archem, the plaintiff, Ray Vallejo, sued Archem for negligence after sustaining injuries while working in Archem’s premises. Id. at 269 . Austin Industrial (“Austin”), a temporary labor supplier, provided Vallejo to Archem. Id. Austin claimed to be Vallejo’s employer under the Labor Code, and thus to be immune from liability under the exclusive remedy doctrine, because, under its contract with Ar-chem, Austin would provide workers’ compensation benefits to Vallejo in the event of an accident. Id. Indeed, Austin argued there was uncontroverted evidence showing it provided workers’ compensation benefits to Vallejo. Id. at 270 . Austin moved for summary judgment, arguing it was Vallejo’s employer for workers’ compensation purposes for the above reasons. Id. The trial court rendered judgment for Austin, and this Court reversed. Id. at 271 .

This Court began its analysis by stating that, when “one entity ‘borrows’ another’s employee, workers’ compensation law identifies one party as the ‘employer’ and treats all others as third parties.” Id. at 269 (citing Smith v. Otis Eng’g Corp., 670 S.W.2d 750, 751 (Tex.App.—Houston [1st Dist.] 1984, no writ)). The Court further noted that the Austin Archem contract did not address who had the “right to control” Vallejo’s activities, and found an issue of fact existed as to who had the right to control Vallejo at the time of the accident. Id. at 270, 271. As a result, this Court reversed the summary judgment, and further held that “[t]he payment of benefits to an employee on behalf of an employer does not entitle the employer to enjoy status of ‘employer’ under the workers’ compensation act.” Id. at 270. Relying on Smith , this Court added that, within the “borrowed servant” context, the party with the “right to control” the employee at the time of the injury is the “employer” for workers’ compensation purposes. Id. at 269. Because Archem relied on Smith , I examine the analysis this Court employed in Smith .

In Smith , the plaintiff was employed by Stewart Well Service Company (“Stewart”), and was injured while unloading equipment from a truck owned by Otis Engineering Corporation (“Otis”). Smith, 670 S.W.2d at 751 . The plaintiff accepted workers’ compensation benefits from Otis, and also executed a release in conjunction with these benefits. Id. The plaintiff sued both Stewart and Otis for negligence. Id. The trial court granted a summary judgment in Otis’s favor. Id. This Court reversed, stating that, even though “the plaintiff accepted [workers’ compensation] benefits and executed a release in [Otis’s] favor,” Otis could not be deemed the plaintiffs employer as a matter of law because an issue of fact existed as to which entity had the right to control the plaintiff when he was injured. Id. at 752 . 1

The Smith Court justified its adherence to the “right to control” principle by stating, “the party that assumes primary responsibility for payment of workers’ compensation benefits is not in every instance the workers’ compensation employer, since that party’s carrier can recoup those payments from the entity actually liable, i.e., the employer with the right to control the injured worker.” Smith, 670 S.W.2d at *729 751 (citing Associated Indem. Co. v. Hartford Accident & Indem. Co., 524 S.W.2d 373, 376 (Tex.Civ.App.—Dallas 1975, no writ)) (emphases added).

In other words, Smith holds, without explanation, that the entity with the right to control the employee is, ipso facto, the injured employee’s employer for workers’ compensation purposes. It is true that the carrier of the employer for workers’ compensation purposes can recoup the benefits it paid from the employer who is liable under the common law; the question is what set of criteria to use to determine which entity is shielded from and which remains exposed to common law liability under the workers’ compensation scheme. I disagree with using the “right to control” test, a tool traditionally used to impose liability on employers, to shield employers from common-law liability in the workers’ compensation context, an essentially no-fault scheme that seeks to protect subscribing employers who pay benefits to their injured employees. See Tex. Lab. Code Ann. § 408.001 (a) (Vernon 1996).

Furthermore, Smith predicated its holding on a statute that has since been repealed, section 6a of article 8307 of the Texas Revised Statutes (the workers’ compensation statute in effect at the time), stating, “the employer is entitled to be subrogated to any recovery by the employee up to the amount of its workers’ compensation payments to that employee.” See Smith, 670 S.W.2d at 751 (citing Act of May 10, 1973, 63rd Leg., R.S., ch. 88, § 10, sec. 6a, 1973 Tex. Gen. Laws 187 , 193-94, repealed by Act of Dec. 11,1989, 71st Leg., 2nd C.S., ch. 1, § 16.01(10), 1989 Tex.Gen. Laws 1, 114). Because the statute that gave Smith its underlying rationale has been repealed, the present validity and applicability of Smith’s holding is undermined.

Moreover, Smith’s introduction of the “right of control” test in the workers’ compensation context is problematic for additional reasons. First, Smith 's reliance on Hartford for the proposition that the employer with the “right to control” is the employer for workers’ compensation purposes is misplaced. The Haitford court did not hold that the entity having the right to control the worker was the only employer for workers’ compensation purposes. To the contrary, the court expressly stated it did not have to decide whether to “reject the dual-employment theory and apply the right-of-control test [because] no right to a subrogation recovery [had] been established.” Hartford, 524 S.W.2d at 376 . Accordingly, it was Smith , rather than Hartford, that first used the “right to control” test to determine the employer for workers’ compensation cases. 2

Importantly, Texas courts have recognized that the workers’ compensation scheme benefits both employees and employers:

*730 The workers’ compensation act was adopted to provide prompt remuneration to employees who sustain injuries in the course and scope of their employment ... The act relieves employees of the burden of proving their employer’s negligence, and instead provides timely compensation for injuries sustained on-the-job ... In exchange for this prompt recovery, the act prohibits an employee from seeking common-law remedies from his employer, as well as his employer’s agents, servants, and employees, for personal injuries sustained in the course and scope of his employment.

Hughes Wood Prod., Inc. v. Wagner, 18 S.W.3d 202, 206-07 (Tex.2000). Texas has an interest in maintaining a stable workers’ compensation system that binds employers and employees. Id.; Larchmont Farms, Inc. v. Parra, 941 S.W.2d 93, 95 (Tex.1997).

The dispositions of Smith and Archem run counter to the policy behind the existence of the workers’ compensation scheme because they make an employer who has subscribed to, and paid benefits to an injured employee, in exchange for protection from liability under the common law, subject to the type of liability the scheme sought to avoid. This is an unfair construction because it deprives the employer from its purported benefit (protection from common law liability) even though the employer has not been relieved of its burden, namely, subscribing to and paying for workers’ compensation. Cf. Richmond v. L.D. Brinkman & Co. (Texas) Inc., 36 S.W.3d 903, 907 (Tex.App.—Dallas 2001, pet. denied) (stating that court should not construe statute in way that leads to foolish or absurd consequences but we presume the legislature intended a just and reasonable result).

For these reasons, I reluctantly follow the rule we articulated in Smith and Archem. If I were writing on a clean slate, however, I would decide this case by adopting the holding of Texas Industrial Contractors, Inc. v. Ammean, 18 S.W.3d 828 (Tex.App.—Beaumont 2000, pet. filed) that,

[when], however, a worker is hired by one company that has contracted to do work for another, that company has a workers’ compensation policy, and the worker receives benefits under that policy following an award by the Texas Workers’ Compensation Commission, the worker’s common law claim against that company is barred by the [Labor Code’s] exclusive remedy provision, even if control over the details of the work is in the hands of the other company with which that company has contracted.

Id. at 831 ; 3 Chapa v. Koch Refining Co., 985 S.W.2d 158, 161 (Tex.App.—Corpus Christi 1998), rev’d on other grounds, 11 S.W.3d 153 (Tex.1999). This result gives effect to the policy behind the workers’ compensation statute, which deprives the injured employee of a subscriber of many common law rights in return for prompt compensation benefits and medical treatment. See Arnold v. Renken & Kuentz Transp. Co., 936 S.W.2d 57, 58 (Tex.App.—San Antonio 1996, no writ). Accordingly, I believe that applying the above holding to this case would yield a *731 fairer result and comport -with legislative intent.

. We note that, unlike Tandem in this case, Otis was not the plaintiff's primary employer, nor was it solely responsible for hiring, screening, and paying the plaintiffs taxes. See Smith, 670 S.W.2d at 751 .

. Neither Smith nor Hartford applied the modem "exclusive remedies” statute. The current version of section 408.001(a) was enacted in 1993. See Act of May 12, 1993, 73rd Leg., R.S., ch. 269, § 1, 1993 Tex. Gen. Laws 1130 , 1175 (this version was substantially similar to the one enacted in 1989, see Act of Dec. 11, 1989, 71st Leg., 2nd C.S., ch. 1, § 4.01, 1989 Tex. Gen. Laws 1 , 32). The clear mandate of section 408.001(a), barring an injured employee who receives workers' compensation benefits from suing her employer under the common law, differs from the "exclusive remedy” provision in effect when Smith was decided, which stated that "[t]he employees of a subscriber ... shall have no right of action against their employer ... for damages for personal injuries ... but such employees and their representatives and beneficiaries shall look for compensation solely to the association, as the same is hereinafter provided for.” Act of May 6, 1983, 68th Leg., R.S., ch.131, 1983 Tex.Gen.Laws 613, 613 (amended 1993) (current version at Tex. Lab.Code Ann. § 408.001(a) (Vernon 1996)).

. Ammean suffered an injury while working on the premises of Bayer Corp. Ammean, 18 S.W.3d at 830 . Ammean had been hired by Texas Contractors, a firm that was under contract with Bayer to act as an independent contractor doing work on Bayer premises. Id. at 831 . Even though Texas Contractors was not a temporary labor agency, Ammean was a "borrowed servant” who, like Alvarado here, applied for and received workers’ compensation benefits from his primary employer. See id. Accordingly, Ammean's holding applies equally well to this case.