The quid pro quo of Texas’ workers compensation statute bars injured employees of a general contractor from bringing suit against employees of a covered subcontractor, their deemed fellow employees.

Under the Texas code, the workers’ compensation exclusive remedy bar applies up and down: barring injured employees of subcontractors from bringing common law tort suits against a general contractor which provided workers compensation insurance, and also in reverse, barring injured employees of the general contractor from bringing suit against a subcontractor, even when the employees are covered under separate workers’ comp policies. So says the Texas Court of Appeals in Garza v. Zachry Construction Corp., 2012 WL 1864350 (Tex. Ct. App. May 23, 2012).

In Garza, an employee at DuPont’s Ingleside, Texas plant was injured when the railcar mover he operated came loose. He received workers’ compensation benefits through a policy provided by DuPont, and later brought common law tort claims against a subcontractor and two of its employees for negligence in causing the accident. The subcontractor, whose employees were covered by a separate workers compensation insurance procured by DuPont, successfully argued that DuPont was their deemed employer and the injured worker and subcontractor employees were deemed fellow employees. In this way, the subcontractor was shielded from such actions by the workers’ compensation exclusive remedy bar contained in Texas Labor Code section 408.001 as made applicable to subcontractors by Labor Code section 406.123. On appeal, the Court of Appeals agreed.

Garza, the injured employee, argued that the exclusive remedy bar could not apply where the subcontract specified that the subcontractor’s employees were not employees of DuPont, Garza’s employer. But even if they were deemed employees for purposes of statutory workers compensation benefits, the bar could not apply where the subcontractors were covered under a separate workers’ compensation policy than that covering DuPont’s employees. Lastly, if the statute does immunize the subcontractor, then it violates the open courts guarantee (assuring that a person bringing a well-established common-law cause of action will not suffer unreasonable or arbitrary denial of access to the court) in the Texas constitution.

In rejecting these arguments, the appellate court first ruled that the subcontract at issue required DuPont to procure workers’ compensation coverage for Zachry’s employees, “thereby, creating the legal fiction of DuPont as the ‘deemed employer’ and Zachry and its employees as ‘deemed employees'” under Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 438 (Tex.2009) and HCBeck, Ltd. v. Rice, 284 S.W.3d 349, 352 (Tex.2009). The subcontract, however, did not provide these same “deemed employees” with the other more traditional employee benefits enjoyed by DuPont’s actual employees. Secondly, the court ruled that nothing in the workers compensation statute, section 406.123, “specifies that when a general contractor purchases a workers’ compensation policy for its own employees and also purchases a second policy for its subcontractors, then its own employees and its “deemed” employees may freely sue each other simply because they receive their coverage under different policies, albeit from the same “employer” for work performed at the same job site.” According to the court, such an interpretation would be contrary to the purpose of the legislation – which is to encourage coverage of employees. Finally, the court concluded that Garza’s rights under the open courts provision are not violated because “[t]he workers’ compensation benefits he receives from his employer, which also provides those same benefits to its subcontractors, is an adequate substitute for his right to bring his tort claims against those subcontractors.”