HCBeck, Ltd. v. Rice

HCBECK, LTD., Petitioner,

v. RICE, Respondent.

Charles

No. 06-0418.

Supreme Court Texas. 18,

Argued Oct. 2007. 3,

Decided 2009. April June

Rehearing Denied 2009. Martin, Stutz,

Peter Martin Mason Glast, Weiner, Phillips, David R. & Mur- P.C., Dallas, ray, for Petitioner. Clifford B. Rodgers, Rodgers Law Firm, Boudloche, Paul Mason & Boud- loche, Worth, Respondent. Fort Shoulders, Kelly Susan Cokinos Bosien Young, Hughes, & Lin Arlington, McGin- LLP, Austin, nis Lochridge Kilgore, Di- & Larson, Se- 361. dis- Wynne plan. Gardere We ana Panian Hollenbeck, A well, LLP, agree. general workplace Russell Richard Houston, Close, LLP, general that binds a contractor to Wright plan & Brown compensation Raschke, of Fred D. Texas Association Counsel, Austin, its subcontrac- curiae. for its subcontractors and amici Defense Legislature’s the employees

tors’ achieves opinion the of delivered Justice GREEN objective to ensure that the subcontrac- Court, in which Chief Justice of tors’ receive benefit JEFFERSON, HECHT, Justice Justice compensation insurance. Accord- WAINWRIGHT, and Justice BRISTER ingly, appeals’ we reverse the court of III, V, I, II, IV, and joined, and Parts judgment. joined.

VII of which Justice WILLETT I of the Texas Workers’ purpose (FMR) FMR Texas Ltd. contracted with Compensation provide employees Act tois HCBeck, to construct an office cam- Ltd. and certainty that their medical bills on fea- pus property. One they covered if wages lost will be (the tures of Construction this work- injured. employee An benefits from Management Agreement, or the Agree- it insurance because ment) was a workers’ insur- litigation expense saves the time and plan FMR that provided covered in a law proving fault common herent The Agreement required the work site. But subscribing employer tort claim. plan, part this insurance of an owner con- it is then also receives benefit because (OCIP), program togeth- trolled insurance statutory exclusive entitled to assert Handbook, corresponding er with its claims of remedy defense tort incorporated to be into all construction injuries. job its related contracts entered into HCBeck with remedy provided This exclusive defense any Agreement subcontractors. The de- also to a subscribing employers is afforded scribed the manner in which would if, pursuant to a written on project: agreement, “provides” compen- sation insurance the subcon- Work, Prior to commencement its employees. tractor and See [FMR], option the Owner Lab. Tex. 408.001(a). 406.123(a), §§ cost, thereafter, may except secure Code herein, provided as otherwise maintain case, the extent to this we consider during at all performance times “provide” which a contractor must Agreement [workers’ under compensation insurance Owner, ... with the insurance] Act to [HCBeck], Manager Construction sub- resulting immunity status and the contractors, persons and such other work-related claims of as the owner name as in- interests employees. See Tex. Lab.Code parties.... sured 406.123(a), §§ ap- The court of peals working that a does and all subcontractors held “provide” coverage project in the manner con- were to enroll in the 406.123(a) templated by As each contractor in the section when enrolled representative with the subcontractor FMR’s insurance requires enroll only designate that the subcontractor would contractor “insured” for workers’ and other insur- site owner’s coverage, anee individual permitted by section 406.123(a) Act, in the enrolled contrac- consequently issued a statutory Agreement employer entitled to im- permitted tor’s name. The munity from law liability common modify the claims FMR to terminate or OCIP at brought by Haley employees. Greer’s See any time. But in the event FMR decided 406.123(e). § OCIP, HCBeck ar- an to terminate the alternate insur- Tex. Lab.Code gued that remedy Rice’s exclusive should provision Agreement ance be the compensation workers’ benefits al- secure, cost, at HCBeck to FMR’s 408.001(a). ready § received. See id. covering insurance itself and all subcon- Rice, hand, on the other contended that tractors and the same level the subcontract between HCBeck and Ha- compensation coverage as the workers’ re- ley Greer obligated Haley Greer —not quired the OCIP. HCBeck—to its own coverage in OCIP, Pursuant terms of the the event that FMR terminated its OCIP. purchased compensation FMR workers’ in- Since the compensation project surance to cover the construction for Haley Greer’s came at no Meanwhile, premiums. and HCBeck, cost to argued that HCBeck a subcontract HCBeck entered into with did not “provide” insurance and was there- Haley recognized Greer. The subcontract fore not qualified under the Act as a statu- that covered project was FMR’s tory employer entitled to the exclusive incorporated OCIP further insur- remedy defense. provisions ance origi- contained FMR’s granted trial court mo- HCBeck’s nal contract HCBeck. As mandated tion summary judgment and denied contract, original the subcontract reciprocal Rice’s partial cross-motion for required that Greer Haley apply for and summary judgment. The court of appeals, Haley enroll in Greer FMR’s OCIP. however, held that “HCBeck’s contract enrolled in a separate with Haley simply incorpo- Greer —which compensation rated FMR’s OCIP into subcontract Haley was issued in Greer’s name. under the direct order FMR in its con- Rice, Haley employee, Charles Greer’s tract with HCBeck—is insufficient to con- injured working while on the construc- stitute ‘providing’ compensation project. upon Rice made claim Haley insurance to Greer.” 284 compensation received workers’ benefits *4. peti- 2006 WL 908761 at HCBeck Haley under the policy issued question tioned this Court on the wheth- pursuant to FMR’s He then filed a er, through arrangements its contractual negligence suit HCBeck. HCBeck Greer, “provided” with FMR and Haley moved for summary judgment claiming insurance to Greer so as to original speci- contract with FMR for immunity liability from common law apply fied “shall” all 406.123(a), §§ claims. See Tex. Lab.Code project performed by 408.001(a). work at the HCBeck “pro- that HCBeck We hold and, but for subcontractors HCBeck’s compensation vides” workers’ Greer, subcontract with Rice would plan under the Act because not be working project on a contractu- incorporated upstream into both ally provided insur- tract with FMR downstream and its sub- covering Haley employees. contract with included Haley Greer work- HCBeck therefore maintained that it “pro- ers’ employees,

vided” workers’ insurance to Greer’s and because the con- 406.123(a). ultimately If the contrac- tracts specify Code “provides” tor obtaining alternate work- responsible for surance, employer it becomes in the event employees. See id. Accordingly, the OCIP. terminated (“An 406.123(e) agreement under is Rice’s statuto- we conclude that HCBeck contractor the section makes the 406.123(e), and ry employer under section the subcontractor and the sub- remedy is the workers’ Rice’s exclusive ”). employees.... contractor’s Such already he has re- compensation benefits brought from claims employer is immune ceived. Id. the employee a subcontractor’s because remedy employee’s exclusive is his work- II compensation ers’ benefits. Id. a trial review court’s sum We 408.001(a). undisputed It is that mary Operat de novo. Valence judgment contractor. id. HCBeck is a See Dorsett, 656, 164 661 ing Co. v. S.W.3d 406.121(1) (defining general contractor (Tex.2005). here, When, parties as both person “a to procure as who undertakes summary judgment file a with motion service, performance the of work or a ei- court, granted the trial and one is and one the separately through ther use of sub- denied, reviewing court determines contractors”). Thus, only question questions presented all and renders the gen- whether the between this judgment have been rendered that should eral contractor and this Comp. the trial court. Tex. Workers’ “provides” workers’ in a Tex., Comm’n v. Patient Advocates 136 of a statutory manner that makes HCBeck (Tex.2004). 643, Statutory S.W.3d 648 liability immune from under sec- legal question, is a which is construction give de novo to ascertain and reviewed OCIP administered Legislature’s effect intent. F.F.P. provided FMR PaHners, Duenez, v. Operating L.P. 237 all coverage surance to contractors and (Tex.2007). 680, To discern employees working job their intent, begin “plain we must site. does Rice claims HCBeck meaning and common of the statute’s because, as a Transp. Dep’t City words.” Tex. v. terms of the between subcontract HCBeck (Tex. Valley, Sunset Greer, was never obli- 2004). objective We also consider gated provide to achieve sought through to coverage to Greer or its statute, consequences well as the of a employees opted in the event to Id.; particular construction. also Tex. see terminate Both the original the OCIP. (5). 311.023(1), Gov’t Code FMR/HCBeck HCBeck/Haley Greer subcontract state III any that FMR terminate its OCIP at Compensation time, event, Under the Workers’ but in that contractors Act, a “general and a subcon must obtain “alternate insurance.” As be- tractor may agree enter into a written the general tween contract and the subcon- tract, provisions ment under which the alternate different, provides they but slightly are outline em cov- to the subcontractor and the manner in which to be ployees ered FMR decided to terminate the of the subcontractor.” Tex. Lab. points to the alternate insur- tain the to cover the HCBeck/Haley in the paragraph job on the site specifies because it Greer subcontract show HCBeck HCBeck, who was identified in the con- provide required was never Manager, tract the Construction “shall” compensation coverage Moreover, secure the alternate insurance. employees. The paragraph and its OCIP Handbook states that “Contrac- states: will required provide tors be on-site

ALTERNATE INSURANCE: in the event of [insurance” termi- OCIP required to Owner is not furnish [FMR] together, nation.1 When read provi- these If the OCIP. elects to terminate [FMR] a contingency plan sions outline time, any will give [FMR] event FMR right exercises its contractual subcontractor written notice. opt obligation out work- termination, event of OCIP Subcontrac- coverage, tor will and lower-tier subcontractors plan charges HCBeck with the re- Alternate Insurance. sponsibility providing alternate insur- Alternate Insurance is the re- ance, Haley not Greer. quired by the Contract [FMR/HCBeck] The dissent contends that HCBeck did if in Documents the OCIP not force or “provide” compensation not workers’ be- apply. does not cause not agree procure “HCBeck did to that, if argues the OCIP is terminat- compensation workers’ insurance in force ed, places obligation provision this Greer, Haley agree for pay nor did it to or obtaining compensation workers’ insurance obligate pay premi- somehow itself to employer, Haley for his benefit on his own ums, or otherwise assure the Greer, workers’ although and not HCBeck. But compensation coverage Haley Greer had in gleaned an interpretation such could be injured.” from effect when Rice was paragraph its third sentence is isolation, in complied considered the last sentence S.W.3d 362. But HCBeck in respects provision all with the specifically requires parties to refer to the Act “if expressly documents that allows it to enter into a FMR/HCBeck or ap- the OCIP not force does not to agreement provide workers’ ply.” paragraph That alternate insurance compensation insurance to its subcontrac- states: employees. and their tors Tex. Lab.Code

If elects to exclude this Agree- [FMR] provision That not re- does ment, thereof, any portion or actually to quire general contractor ob- any OCIP or for reason is unable insurance, [FMR] or it tain even for di- or unwilling to furnish ... [the OCIP] rectly. only The Act requires that there Manager the Construction shall secure agreement provide work- be a written to such the Owner’s cost.... compensation coverage. Id. case, the coverage This it that was paragraph makes clear contractually obligated provided Haley by HCBeck is to ob- Greer FMR under Handbook, amend) [Haley prepared Greer] 1. The OCIP an out- their Subcontractors management provide side risk firm further policies provide cov- additional regarding clarification FMR's differen- erage. higher-tier ..." This indicates that tiates between contractors and subcontrac- obligation has the ultimate to en- tors, that, stating terminat- “[i]f [OCIP] is sure that the of the lower-tier sub- apply, ed [HCBeck] or does not Contractor contractors covered. (and will be to amend cause their FMR, compensation insurance than is or was backed HCBeck’s HCBeck, Haley assuring Haley Greer this case. obligation specific in the event Greer remained covered contractor workers’ its simply decided discontinue plan offers certain bene- advantages, parties fits to who seek its but obligation strength- is further HCBeck’s parties may which benefits elect to maintaining its own interest ened provid- forego. We conclude that HCBeck claims defenses insurance to Ha- ed argues employees. dissent Greer’s way ley employees by not contracting for does FMR’s written OCIP. no because there is equate “providing” will that the assurance obligation and leave not abandon its IV But injury. risk of uncovered employee at position In a of the dissent’s variation any guarantee there is no not sufficiently that HCBeck has involved for its will purchase itself in the actual it, employees. require The law does although policy strongly encourages public it, gain any advantage by the court of carry that elect to Employers it. appeals did not concluded that HCBeck likely than do compensation coverage more because, “provide” the Act includes incentives so because says, it the subcontract called employ- their employers who Greer to obtain its own alternate insurance incentive, of The most obvious ees. if FMR terminated the OCIP. 284 S.W.3d course, employers is that are immunized *4,. 384, at It is true 2006 WL 908761 liability negligence workplace terminated, that if the OCIP was

juries employees. to their id. See HCBeck failed to obtain alternate workers’ always employer But an Haley in its place, insurance free, reason, to discontinue whatever Greer would have to had obtain workers’ insurance. See id. compensation insurance on its own or- (“An notify each employer 406.005 shall employees. der to cover its But the fear employee provided by this section that like employee might an Charles Rice or not the has workers’ whether left be uninsured the failure of (em- coverage.”) insurance to HCBeck obtain workers’ added). phasis happens, When that for Haley prom- Greer as it had remedy de- employer loses its exclusive that ised is concern would exist whether result applies fense. The same or not there was an or other written OCIP has, pursuant contractor who coverage. Even if agreement purchased written a workers’ agreement, Haley no compensa- Greer had policy covering its insurance, not without a subcontractors its em- subcontractors’ He remedy. right would have the to sue so, ployees. it does When FMR, Haley Greer and HCBeck tort. statutory employer contractor becomes the lays But the the court of appeals scenario of its employees, reality, Haley out happened. never on thus entitled to the benefits conferred Greer was covered workers’ employers Act. id. See 406.123(e). tion insurance and Rice collected workers’ But compensation benefits from FMR’s agreement who makes such an is no more that, held on the required providing appeals to continue workers’ But the court of Haley might ing that Greer it to do so.” Id. But possibility mere HCBeck meets alternate have had to secure this test. has HCBeck satisfied the first terminated, own if the OCIP was prong HCBeck/Haley because the Greer permitted not be the bene- HCBeck should Haley subcontract covers Greer with its fit of status under own via FMR’s OCIP. 384, “conduit,” Act. 284 S.W.3cl at 2006 WL 908761 acting Without as a HCBeck conclude, however, at *4. We says, Haley the dissent Greer not qualify would still as a HCBeck have able to project. been for the “provided” employer because Indeed, helps makes by virtue of compensation insurance subcontractors, available to as the wider buy the insur- either availability of insurance under an OCIP itself, compensate Haley or Greer for enhances the use of smaller contractors on ... any premiums “insurance and all projects. P. Jacqueline Sirany See & things necessary complete perform- for the O’Connor, Duffy James Controlled Con- includ[ing] ... all other ance of Work Programs: Putting struction Insurance completely and costs expenses Wrap-Ups, Ribbon on WTR Constr. in accordance with the perform Work (2002). 30, 30 n. 3 But HCBeck does Law This “Sub- Contract Documents.” defined stop simply requiring Haley not Greer Amount,” found HCBeek’s con- to enroll in the also meets the OCIP—it Greer, tract with ensures test. prong second dissent’s will the financial obli- never bear agrees it “shall” HCBeck secure gation of the alternate insurance. Wheth- compensation insurance if ultimately er can recover or HCBeck longer place. OCIP is no The dissent expense from FMR is irrelevant: adequately claims that does not HCBeck what matters is that is contractu- HCBeck place by “assure” remains in tak- ally parties bound both alter- ing directly paying guar- such actions as insurance, financially nate and also bound anteeing payment premium, Greer to even if it does not does, think S.W.3d at but we All purchase make the itself. of these effect, guaranty act as to the that steps ample serve evidence premium by virtue of the “Subcontract goes beyond merely “requiring” HCBeck agreed in the contract that it Amount” has Moreover, enrollment in the entire pay Haley project. Greer negates appeals’ evidence the court of workers’ com- No matter who secures the is no clusion there evidence HCBeck pensation upon termination —wheth- OCIP Haley with alternate er it be HCBeck or Greer —that upon OCIP termination. provision guaran- “Subcontract Amount” premiums will tees HCBeck V and, thus, something pot.” “put The dissent would hold that a will not ensuring onus of “provides” insurance if the con- HCBeck, just lapse placed is on “puts something pot,” tractor or require. dissent would something “contributes of value for statu- tory Spe- at immunity.” 284 S.W.3d 364. VI cifically, require dissent would (1) between point disagreement subcon- lies general contractor “assure (2) insured, interpretations of the term plausible tractor is and two interpretation is lapse “provide.” plausible will not without the contractor allow- One Legislature agrees must have intended to that “this matter should be deter- actually happened, status mined what exclude from might happened.” the “conduit” between owner-subscrib- what have true, er Another inter- at 363. If that then the inquiry and the subcontractor. that the must have with pretation might properly end the fact that no contemplated contingency plan the scenario which the for alternate insurance “conduit,” itself, “provides” the workers’ needed to be activated because FMR’s compensation by connecting the subcon- all place premiums paid OCIP was party tractor to the monied most able to up injured. the time that Rice was pay. policy. If we assume that both of these collected from that very benefits reasonable, Indeed, interpretations we are it is the dissent’s view that rests guided by following solely might happen: aid to on what if terminated, construction: OCIP and then if failed to purchase coverage statute, In construing a whether or not Greer, Greer did not pur- ambiguous the statute is considered own, chase alternate on its face, among a court consider “object Rice would be left uncovered. The (1) the: object sought matters sought to be attained” is best achieved (2) attained; circumstances under through pro- the use of an which (3) enacted; which the statute was legis- greater degree certainty vides a that a (4) history; lative common law or former employee will be covered statutory provisions, including laws on insurance. See (5) subjects; same similar conse- Sirany, swpra, at (noting one benefit of (6) construction; quences particular of a “improved coverag- an OCIP as construction administrative of the stat- es”). (7) ute; (caption), preamble, title emergency provision. Second, legislative we consider the histo- 311.023; see also id. ry and the circumstances under which the Tex. Gov’t Code (“In statute, § 312.005 interpreting statute was enacted. Tex. Gov’t Code diligently attempt court shall ascertain years, 311.023. For almost one hundred legislative intent and shall consider all contemplated the Act has that subcontrac- law, evil, times the old the reme- tors can be covered dy.”). Consideration of these factors leads purchased by tion insurance others. law, evil, 1917, that the conclusion “old the Act provision included a that was remedy” and the is best adopt- served designed prevent subscribers from es- latter, inclusive, ing the interpretation of caping liability by hiring subcontractors to the statute. See id. 312.005. perform the same work: First, “object sought the any be attained” If subscriber to Act this with the always has been simple: purpose to ensure cover- avoiding any and intention of age of subcontractors and their employees. liability imposed by the terms of the Act 28, 1983, R.S., See Act May Leg., of 68th any part sublets the whole or of the 950, 5210, ch. 1983 Tex. Gen. performed Laws 5210 work to be or by done said (captioning legislation sub-contractor, the “relating any as subscriber to coverage any employe[e] the event of such sub- subcontractors”). case, of In all injury this of the contractor an in the sustains parties was, fact, agree that Rice in- employment course of his he shall be injured. sured when he was purposes dissent deemed to be and taken for all

357 employe[e] payroll) paid this Act to be the or incurred prime of the subscriber, and in addition thereto such contractor for workers’ in- employe[e] independent shall have surance for the sub-contractor right of action such sub-contrac- employees the may tor, way which shall in no be affected be deducted from the contract or price any compensation received him be any other monies owed to the sub-con- provisions the under terms and tractor the prime any contractor. Act. contract, such the subcontractor his 28, 1917, R.S., Leg., of Mar. 35th ch. Act employees shall be employ- considered 6, 1, II, 103, Part sec. Tex. Gen. ees of prime the contractor only for 269, term, using of By 284-85. Laws purposes the workers’ “subscriber,” clearly Legislature laws of ... this state and for no other tended status purpose. only by one pur- could be claimed who 1983, policy. 28, chased Act May R.S., Leg., 68th ch. when the Legislature But enacted the 950, 1, (d), 6(c), sec. 1983 Tex. Gen. 1983, agreement provision written it 5210, Laws It significant 5210-11. provision kept above added three Legislature specify only did not (a) agreement provi- others: “subscribers” enter could into written (b) itself; sion definition subcontrac- agreements compen- (c) tor; prime definition contrac- subcontractors; instead, sation to it added urges Id. tor. The dissent throwback term, a new “prime contractor.”2 This interpretation must essentially one —that Legislature indicates that must have i.e., subscriber, purchaser; be a to claim contemplated entity that the that has sub- statutory employer benefit. But this policy, scribed to the blanket and the enti- interpretation ignores fact ty that procure “has undertaken to “prime Legislature added the contractor” services,” performance of work could term provision, yet kept the “subscriber” be allowing different. Other than for the very 28,1983, of May same act. Act possibility that there could be an owner- R.S., 1,§ 950, 6(a), Leg., 68th ch. sec. separate general subscriber and a Gen. regard Tex. Laws 5210. With tractor, Legislature made no further specifical- to the written section two, distinctions between the for it would term, ly, chose use the equally bad for the contractor contractor,” opposed to “prime “sub- leave the subcontractor’s scriber:” without would for the own- prime A subcontractor and contractor er purchases Entergy who the OCIP. See whereby make a written contract States, Summers, Inc. v. prime will Gulf work- (Tex.2009). For if no benefits the sub- place, then owner nor the gen- neither the contractor and to of the sub- eral contractor as a statuto- .... may pro- [T]he (based premiums ry employer vide that the actual entitled exclusive rem- 12, 1989, "general Leg., 2. "Prime contractor" amended became Act of Dec. 71st Act, C.S., 1, 3.05(a)(2), of tractor” in later but the revisions § 2d ch. 1989 Tex. Gen. virtually unchanged. definition remained Act 1, (current Laws 15 version Tex. Lab.Code 28, 1983, R.S., 950, 1, May Leg., § of 68th ch. 406.121(1)). § 5210, 6(c), 1983 Tex. Laws 5210-11 sec. Gen. 358 scope employ- of his in the course and See

edy defense. Tex. Lab.Code ment. (e). 406.123(a), § Enters, Alvarado, v.

Further, Wingfoot of sentence the second (Tex.2003) 134, (quoting Hughes Wood allows 142 provision agreement written 202, Prods., pre- Wagner, 18 S.W.3d the actual Inc. v. to deduct prime contractor case, (Tex.2000)). we In the same In this subcontractor.3 206-07 from the miums cover- bias” case, pay recognized for a “decided contracted also for articulated a construction through age, and we Greer’s mir- Amount,” op- agreement provision the written “Subcontract very case: premiums facts of this contractually deducting rors the posed to contem- subcontract from legislation was agreement] [The no real But there is the statute. plated by premis- mean that when a construed to for two methods between distinction procure agree[s] es owner is sim- premium paying the insurance general coverage for its —it case, reality either accounting. In ply general contractor’s contractor and the for the actually paying was is that HCBeck subcontractor, suit negligence insurance —further against both employee beyond gone has that HCBeck evidence the subcon- contractor and general to enroll Haley Greer merely “requiring” rem- by the exclusive tractor barred [is] in FMR’s OCIP. edy provision.... intent,

Next, we look to determine 140, (citing 142 111 S.W.3d at Wingfoot, other or former statu- Root, Inc., common law or “the 947 v. Brown & Williams the same including laws on tory provisions, 673, (Tex.App.-Texarkana 675-77 subjects.” writ)). or similar Furthermore, 1997, several of Tex. Gov’t Code no previously expressed § have 311.023. We that a have concluded appeals the courts of purpose behind understanding of our “provides” remedy defense: the exclusive prem even if the compensation insurance See, e.g., policy. pays owner act was ises The workers’ — Konecny, Inc. v. Group, Hunt Const. prompt remuneration adopted 5102276, -, -, *6 2008 WL injuries in the S.W.3d sustain who 4, 2008, Dec. (Tex.App.-Houston [1st Dist.] employ- of their scope course (“Had intended Legislature no pet.) ... The act relieves ment. sim ‘purchase,’ it could ‘provide’ to mean employer’s their proving the burden ‘purchase’ in the word timely ply have used provides negligence, and instead Co., stead.”); 270 Eldridge v. Elec. on- Funes injuries sustained compensation for 666, Antonio (Tex.App.-San 672 exchange for this S.W.3d the-job.... (“to 2008, pet.) no hold recovery, prohibits the act prompt ‘provide’ did not common-law contractor seeking employee preclude protection as well as would employer, from his remedies clearly contractor, servants, whom the and em- employer’s agents, his under subsections protect intended injuries sustained ployees, personal C.S., 1, 3.05, 12, 1989, recodified, Leg., § 2d ch. 71st sentence 3. The deduction 1, 15, 406.123(d) repealed Act of Tex. Gen. Laws 1989 finding place in section its final 5, R.S., 269, 22, 1993, 1983, 28, Leg., May ch. 73rd May 68th Act of the Labor Code. 987, (current 1, 6, ver- R.S., 950, Tex. Gen. Laws Tex. Gen. Leg., sec. ch. 406.123). 5210-11, at Tex Lab. Code Dec. sion Act of amended Laws

359 406.123(a) (e)”).4 not bind Although and tractors to employers us, per are interpretations these ing on entitled to exclusive remedy defense. con point on the that multi-tiered suasive Such a scheme seems consistent prevalent relationships tractor benefits offered controlled insurance Texas, interpreting and that throughout programs, are designed which to minimize blanket way in a that favors the statute employ- risk that subcontractors’ aligns to all coverage workers on a site ees left will be uncovered.5 On closely Legislature’s more with the “decid hand, holding that “pro- HCBeck does not Wingfoot, coverage. ed bias” vide” workers’ it because 140; see also Etie v. Walsh & at S.W.3d directly paid guar- has not for or somehow Co., Ltd., (Tex. 764, 768 Albert of payment anteed via line of policy denied). 2004, App.-Houston pet. [1st Dist.] credit thwart the would usefulness of con- OCIP, designed by assure programs trolled insurance that allow cov that workers’ insurance highest-tiered entity to quality ensure erage provided was to all the workers on uninterrupted coverage to the lowest-ti- project including employ its construction — clear, ered It employees.6 is not either contractors ees of and subcontractors —is appeals’ from the court of holding or the of with our the in consistent articulation dissent, guarantee what kind of would purpose compen tent and of ade- contractor to sation statute. quately “provide” Finally, consequences we consider the of insurance to secure the exclusive construction. particular Tex. Gov’t Code remedy directly defense the absence of Holding “pro- 311.023. that HCBeck obtaining paying compen- workers’ compensation, vides” even when coverage for sation em- purchased not direct- has allow of ly, multiple ployees. would tiers subcon- buying But distinguish attempt certainty protection, manage- 4. of Both these cases of centralized ment, appeals' opinion coverage). of the court Rice v. and enhanced pointing fact that illustration, high of 6.As a matter courts automatically Greer enrolled highlighted OCIP, other states have of benefits contractually and that FMR was not - Hunt, programs controlled kinds of bound continue the OCIP. See prevalent throughout gen -, 5102276, *7; that are Texas. See 2008 WL Okla., erally Indep. Agents Funes, Ins. Inc. Okla. v. 270 S.W.3d at dissent 672. As the has of Auth., 675, (Okla.1994) Tpk. 876 P.2d urged, we happen, look at what did not what ("Not only typical designed to re OCIP might happen. 284 S.W.3d at Just like 361. Hunt, premiums, it al duce the cost the subcontractors Funes and management and lows for a coordinated risk OCIP, did enroll in Charles FMR's safety program for workers and visitors collect Rice did bene provides site. Thus, construction An also injury. reality fits for his because the same, premium rebates to the own in each we think the facts case are the records.”); good safety er for construction these distinctions do not make a difference. Co., Amer. Protection Ins. Co. v. Acadia Ins. (Me.2003) (“The purchasing power large 5. The of a construc- 991 n. 1 State A.2d owner, costs, accompanied by centralized cov- uses to save secure better cover OCIPs erage age, safety programs. increased economies scale are and have better If a likely project all factors that make it that an less construction does not have an owner-subscriber’s workers' then each contractor and has generally higher procure be terminated. own insurance See and the supra, (discussing Sirany, passed at 30-33 various cost of the on to OCIPs, costs, State.”). including benefits reduced remedy defense Rice’s only ap- is the exclusive negligence claims. an availing of oneself of method proved defense, it makes no sense immunity ap reverse court of Accordingly, we the enact insur- Legislature would that the in peals’s judgment and render judgment promote to the cover- designed ing scheme favor of HCBeck. to employees, only the of lowest-tiered age dissenting Justice JOHNSON filed end, employers who want require, the joined. opinion, in Justice MEDINA which immunity purchase to workers’ the defense Justice did not policies participate on the O’NEILL the decision. employees at the same work site. same purpose the entire a scheme defeats Such JOHNSON, joined by Justice and Justice seeming a results in blanket MEDINA, dissenting. coverage and inefficient use

duplicative resources.7 compensation system The voluntary Employ-

bottomed on a trade. insur- ers VII coverage exchange for Texas conclude that We injured immunity from suit scheme, enact- compensation insurance as Employees on the job. accept workers’ Legislature, ed intended in ex- remedy make the defense avail- exclusive change releasing their common law who, able to a use rights employer injuries to sue the with owner and job. Compensation In Texas Workers’ subcontractors, compen- provides Garcia, Commission v. we described coverage to its subcon- sation considering challenge exchange when employ- tractors and the subcontractors’ constitutionality of the Texas Workers’ case, ees. The OCIP this established (TWCA): Compensation Act pursuant to its con- carrying [T]he forward Act— HCBeek, under the Act qualifies tract with provides scheme of the former ben- act— compensation in- “providing” efits the ne- injured workers without in a manner that surance subcontractors proving with- cessity negligence consistent section with employer’s potential out regard HCBeek, having “provided” exchange, defenses. benefits vir- employees by Greer and its damages more limited than the actual having tue otherwise recoverable at common law. We believe requirements satisfied Act’s quo, produces quid pro which statutory employer, recovery, as a should afford- more more limited but certain benefits; ie., an adequate the Act’s renders the Act substitute ed suggests likely projects. System reported that 7. To rule as has the dissent Texas, away along with do OCIPs in impact program amount- of its ROCIP has they large-scale many $8,800,945. benefits de- ed to Sys., Univ. of Texas velopers. example, University For of Tex- Management Mgmt., Annual Office Risk of Risk System operates Rolling a blanket Owner (2007), ltp://www. h available at Report Program, Controlled and since its Insurance utsystem.edu/orm/reports/annualreport_2007. 4,800 inception, the ROCIP has enrolled over pdf. $3 contractors over billion in construc- open guaran- of the courts its OCIP and purposes arranged agency for for an secure individual policies insurance for tee. subcontractors, contractors and including (Tex.1995). 504, 521 both and Haley HCBeck Greer. Today says work- “[a] Court surance only covered on-site construction plan that binds a place activities at FMR’s office campus West- provide contractor to lake. The contractors and subcontractors for tion insurance its subcontractors and contractually required were to maintain its subcontractors’ achieves the proof separate and furnish insurance for objective to Legislature’s ensure sub- their off-site activities. As to the OCIP contractors’ receive benefit insurance, FMR paid premiums. of workers’ insurance.” adjust- Each contractor and subcontractor 349, 350. also says It HCBeck ed its price individual contract to reflect qualifies as a because FMR premiums paid coverage for the Haley incorpo- its subcontract with Greer of the individual contractor or subcontrac- general workplace rated tor. Under HCBeck’s plan. Id. at 350. The Court’s decision FMR, if provide FMR elected not to insur- statutory immunity to HCBeck extends (30) via an “upon thirty ance then requiring corresponding without sub- Owner,” days written notice from the pro quid quo stantive from it as was in- required perform ac- HCBeck was Legislature. tended The decision actually performed tions FMR in this case: enlarges number of entities can securing coverage to write insurers for the employee ostensibly claim that which an contractors’ on-site Westlake construction provides by releasing his or her common activities, paying coverage, for the right immunity law sue— suit — adjusting prices of the con- merely contracting for someone else such tractors, if necessary, to reflect the insur- or the the subcontractor owner of premiums.2 But because FMR both project to secure maintain insurance secured Greer’s insurance and for All the subcontractor. HCBeck did it, for did neither as to the work- here was facilitate communications be- in effect when agree tween FMR and Greer and injured. Rice was Nor un- had HCBeck might provide that HCBeck in the future any obligation dertaken or commitment insurance for Ha- coverage place. that assured the was in beyond Greer. ley goes That what function as HCBeck’s substantive Accordingly, I Legislature intended.1 dis- (1) contractually requiring insurance was sent. subcontractor obtain workers’ com- HCBeck, pensation through plan, Pursuant contract with (2) agreeing might provide through FMR elected future immunity disputes point 1. issue whether HCBeck has 2. asserts employer some basis than as an required Haley agreements Greer to 408.001(a) not before us. See Tex. Lab.Code own I insurance if FMR did not. Because ("Recovery compensation benefits of workers’ regardless reach the same conclusion employee remedy is the exclusive of an cov- re- whether HCBeck or ered quired if did FMR legal beneficiary against aor not, I the documents assume agent employer employee or an so. HCBeck to do the death of or a work-related injury employee.”) sustained em- and the subcontractor’s secure and of the TWCA: ployees purposes not. did Election to Provide Cover- 406.123. with Ha- subcontract Under HCBeck’s age; Administrative Violation Greer, agree pro- not to did ley HCBeck (a) cure workers’ A general the contractor a subcon- Greer, agree nor did it in force for into a written may tractor enter pay obligate itself to the pay general to or somehow under which agreement the or assure premiums, the otherwise workers’ provides contractor coverage coverage the subcon- injured. in effect Rice was Greer had when of the sub- tractor and the incorporated subcontract contractor. FMR and HCBeck. the contract between contract, only agreed In HCBeck (d) ... general If contractor elects a noti- if FMR secure and (a) coverage under Subsection provide was unable or

fied premiums, pay- ... the actual based an under unwilling to furnish the roll, the or incurred contingency latter not oc- OCIP. The did contractor or motor carrier general injured. cur before may from the the be deducted 406.123(a) TWCA, of the Citing section or amount owed to price contract says “complied the Court that HCBeck the subcontractor.... Act provision all with respects the (e) agreement An under this section into a it to enter expressly allows em- general makes the contractor the agreement provide the subcontractor and the sub- ployer of compensation insurance to subcontrac- only for purposes contractor’s — at employees.” tors and their of the laws of -. Section wrong. The Court is this state. general 406.123 that a contractor states (f) general copy A contractor shall file enter into a writ- and subcontractor this of an entered into under agreement agreement general ten which the under general with the contractor’s section provides contractor compensation insurance carrier for the and its the day not than the 10th after later employees, agrees not which it under the date on which contract executed. at point. some Tex. the is a general If contractor certified The Act must Lab.Code self-insurer, the must be copy filed at time of speak insurance in effect Compensation] division. [Workers’ some employee’s injury opposed an into (g) general A contractor who enters date; not, possible future if there would be un- agreement an with a subcontractor immunity no because argument about an der section commits administra- employee suing there no injured would be file violation if the contractor fails to tive general statute contractor. copy clear. and sub- If the contractor (f). Subsection enter under into added). (emphasis 406.123 Tex. Lab.Code which provides statutes,

insurance, construing we ascertain and just promises time, intent as give Legislature’s effect to some future statutory language. City expressed tractor is classified as by contractually Greer’s insurance Hughes, requir Rockwall v. (Tex.2008). Haley Greer to pre- ing participate We use definitions For the same expressed reasons any techni- scribed making above as to the insurance “avail have particular meaning cal or words able,” even HCBeck’s actions fall within otherwise, we construe stat- acquired; expansive supplying, construction to their according plain ute’s words insurance, furnishing, providing contrary inten- meaning unless a common actions do not warrant from the context or such a apparent tion is status because HCBeek still did not con results. Id. construction leads to absurd anything quid pro tribute of value—a 625-26; 311.011. see Tex. Gov’t Code quo Haley employ the trade —to “pro- The did not define ees made for workers’ cover “provide” vides” or as those words Moreover, age. simply HCBeck’s actions Looking in section 406.123. used equate supplying furnishing do not to or we meaning “provide,” common find By contractually requiring the insurance. “furnish,” “supply,” definition includes to Haley to in the enroll or “make available.” Webster’s New Uni- supplied or furnished HCBeek Unabridged Dictionary (1996); versal opportunity obligation Greer with the and The see Tex. Gov’t Code insurance; it not apply provide to did part “make available” definition is fur supplied the insurance itself. or applicability key little when the to obtain- when FMR nished secured ing statutory employer quid pro status is a agency place to the insurance and Garcia, quo. See 521. To of, in premiums. payment Absent or insurance, all a gen- “make available” the for, FMR, curring liability premiums by contractor would have to do eral is refer he the insurance that covered when agent the subcontractor to insurer or injured gone would not have into ef require who would write the or place. fect and been in apply the subcontractor to for insurance Court, parties, agree and I general with an owner such as FMR. The what ac- matter should determined anything does not trade of value contractor tually hap- have happened, might not what such situation. Section 406.123 does pened. happened, As to what express Legislative change intent to not substantively only functioned as a HCBeek quid pro quo concept the fundamental un- through conduit which FMR’s insurance derlying relationships between workers requirements were communicated to subject to and those who could be common Otherwise, Greer. imposed liability on-the-job injuries law to work- played part locating no HCBeek ers. See Tex. 406.123. There- Lab.Code or in se- agent placed who the insurance fore, “supply” part or “furnish” certain the insurance curing making applicable here. The two definition is general remained in effect. For a contrac- essentially “supply” words are the same: “provide” tor as such HCBeek with means “furnish or what is insurance to a subcontractor or lacking requisite,” Webster’s New Uni- exchange and in re- under section 406.123 Dictionary Unabridged (1996), versal significant benefit of ceive the “provide sup- while or “furnish” means status, Legislature surely ply” something. Id. at 777. do general contractor must tended that require- having pro than communicate insurance Court views HCBeck more vided, furnished, is, contractually require par- supplied ments or future, effect, enough not

ties to maintain status. requires subcontrac- even if the contract in which the program in a

tor to enroll 406.123, I would hold that under section pur- contractually agrees owner project “provides” contractor general insurance. the subcontractor’s chase insurance if the something pot,” “puts tractor interpreted could be opinion The Court’s is, of value for something if it contributes contractor to claim allowing statutory immunity. It could do that by agreeing in a statutory employer status (1) the subcontrac- taking actions to assure subcontract (2) insured, the insurance will tor is insurance, requiring the sub- yet also allowing the contractor lapse without if the con- provide coverage equate to to do so. Such actions would Then, long so as the tractor does not. substantive involvement coverage, gen- maintains obtaining maintaining would have contributed eral contractor But for the the subcontractor’s insurance. the subcontractor’s nothing to trade reach a lev- general contractor’s actions to rights, yet their common law employees of warranting el of substantive involvement statutory immunity because it may claim status, coverage would the insurance. contractually “provided” general have to be assured the holding might even be inter- The Court’s dependent merely not be contractor and general a contractor stat- preted giving as a contractual obli- on the fulfillment of contractually if it utory employer status gation payment premiums or the required a subcontractor to work- party, such as a subcontractor another own, insurance on its so compensation ers’ pressure financial might be under long as the subcontractor maintained cov- money payment of its by stopping save general contractor erage. Again, the an owner that premiums insurance nothing for the sub- exchanged would have stop paying run might short of funds release of their employees’ contractor’s words, In other the premiums. insurance general rights common law place contractor would have to general 406.123 of the contractor. Section TWCA position in a to have actual control itself legislative gen- not reflect intent does compensation over the workers’ insurance im- statutory eral contractors should have in force. becoming remaining effective and assuring munity when their involvement flexibility There could be how such requirements are for the and its substantive involvement require- § to the first example, 406.123. met. For so minimal. See Tex. Lab.Code above, general specifi- ment referenced the statute I would that in order for hold cally contemplates em- in which the contractor to be afforded situation if a “provides” “provided” work- subcontractor’s insurance is ployer status because general to a contractor adds the subcontractor ers’ subcon- tractor, must be and its as insureds under general contractor contractor’s workers’ substantively securing general more involved 406.123(f) policy. (requiring work- See id. maintaining the subcontractor’s copy of an general than contractor to file ers’ HCBeck, with its agreement an- under section 406.123 contracting was and that or, insurance, carrier if self- place maintain insured, Divi- Compensation present whether or the Workers’ to be done sion); the failure 406.123(g) (making compensation insurance” Id. because copy of the contract in accordance HCBeck contracted to to file a the “Subcon- (f) viola- an administrative with subsection tract premi- Amount” did not include tion). might also be requirement But paid for Haley ums FMR insur- Greer’s general requir- fulfilled opposed contractually deducting subcontractor or its insurer ing premiums from Greer’s subcon- —— certificate of insured from furnish a status tract. S.W.3d at-. It concludes of a company, copy or a the insurance there is no real distinction between job activi- showing coverage for the of paying pre- two methods As to the second refer- question. ties in it is “simply accounting.” miums because requirement, element enced essential case, -. though, Id. at keeping payment force is matters. distinction Insofar as the work- requirement is most premiums. That ers’ compensation insurance that covered general fulfilled when the contrac- clearly Rice, bystander. was a It was an directly policy premi- liable for the tor is bystander sure; interested to be it was but premi- the insurer either receives ums so a bystander. bought contractor or the ums from Haley Greer’s insurance. It received and unqualified guaranty has an insurer wage checked reports premiums contractor that the premi- which the 406.123(d) See, paid. e.g., will be id. ums were calculated. It determined the pro- that a (stating which amount Greer’s subcon- under a coverage to a subcontractor vides adjusted tract for the premiums. And to do so deduct money pay Haley Greer’s subcon- premiums, payroll, actual based on tract from FMR. not came HCBeck did pays incurs for premiums, coverage from to the amounts owed FMR did. HCBeck had no more involve- subcontractor). There are methods compen- ment in “providing” become which the contractor could inju- covering sation insurance Rice for his premiums liable for assure the directly ry job Westlake than it had in lapse does not other than Haley Greer’s workers’ com- “providing” paying premiums example, directly —for pensation operations. insurance for off-site by letter of credit that the insurer could contractually In both instances HCBeck not premiums draw were required Haley Greer insur- to have the here that noting It is worth otherwise. place, ance in but HCBeck neither secured 406.123 not who must specify section does placement of nor assured premium finally absorb subcontractor’s being injury. at the time of force Rice’s premiums The statute cost. authorizes in- paid or incurred for before us is not question whether to be amounts surance deducted from the best or OCIPs are most efficient to the subcontractor. But the owed Id. way to secure economical insurance —in- preclude not statute does owner cluding compensation insur- cost, premium FMR did in bearing job workers on Nor is ance—for all sites. clearly, And this case. com- it how interface with workers’ OCIPs look- tractor could absorb the cost without signifi- pensation law. Those matters are any party ing to reimbursement. cant, they are more in the nature but better left says Legislature Court “the is that issues reality be- question the work- address. The actually paying balance and these limited whether under fore us is

particular circumstances immunity from suit

extended major incentive injured

an worker —the carry compensa-

an entity that is not

tion insurance —to

injured employer. direct Under worker’s decision, that important

the Court’s carrying

ducement for even is extended HCBeck substantively participate

though it did in Rice the transaction resulted

being covered

insurance. hold that HCBeck was not

I would I statutory employer. would affirm

Rice’s court of appeals. judgment PASO, OF EL

The CITY al., Petitioners,

et

v. HEINRICH, Respondent. M.

Lilli

No. 06-0778.

Supreme Court Texas. Nov.

Argued 2007. 1,May

Decided 2009.

Case Details

Case Name: HCBeck, Ltd. v. Rice

Court Name: Texas Supreme Court

Date Published: Apr 3, 2009

Citation: 284 S.W.3d 349

Docket Number: 06-0418

Court Abbreviation: Tex.