Texas Work Comp Change Cost Business?
by Dr. Tony Magana
Are Texas Republicans fighting judicial activism at the cost of increasing business’s work comp costs? A battle over definitions and limits of power between the Texas legislature and state Supreme Court may disrupt the delicate balance between business costs and workers compensation for injury. In the zeal to affirm legislative autonomy in worker’s compensation critics who warn the legislature may be opening the state to a epidemic of new tort claims without sufficient insurance coverage availability should be heeded.
The concept of separation of powers and balance of powers in the separate branches of government whether in the federal or state government has once again evoked a strong response this time in the Texas legislature. The issue finds many Texas Republican and Democratic legislative members united against a perception of judicial activism by the state Supreme Court rather than divided on a tort decision.
In April the Texas Supreme Court for a second time, rarely does the Court look at cases twice, reaffirmed a decision that owners of a premise through the purchase of worker’s compensation insurance can be protected from lawsuits by the injured employees of a contractor. Critics like Becky Moeller, the President of Texas AFL-CIO, point to the fact that the Court was embarrassed by perceived negative public reaction and had to revisit the case. She stresses that three justices changed their minds as proof.
Normally conservative Texas Republicans can be expected to applaud court decisions which rein in lawsuit abuse by trial attorneys. However, Rep. Dan Gattis (R-Georgetown), who has been a leader in calling for tort reform was reported by the Dallas Morning News to have said that when the Texas Supreme Court had to revise its ruling and the basis for it three times, it could only mean that the court already had presumed their conclusion and was trying to find a way to get there. His support of new legislation has been seen as critical to its passage.
As a result of the actions of the Texas Supreme Court a bipartisan effort was born in the legislature to enact legislation as a response to the Courts “overstepping its bounds” and ignoring the intent of the legislature. HB 1657 sponsored by Rep. Helen Giddings (D-De Soto) clarifies the term “general contractor” in the Labor code to mean a person who undertakes to procure the performance of work or a service only for the benefit of another and the definition of “subcontractor” to mean a person who contracts with a general contractor to perform all or any part of the work or services that the general contractor has contracted with another party, rather than undertaken, to perform. This would remove the blanket liability protection afforded to premise owners by purchasing worker’s compensation insurance.
Anti-activist reaction of the legislature has continued in the deliberation of the measure. The bill was assigned to the Business and Industry Committee where in hearings business interests and tort reform activists registered their complaints against and proponents representing unions and trial attorneys in favor. Subsequently the bill passed committee by a 9-0 vote in April and was sent to the Texas House. This week many Republicans joined Democrats in voting for the measure 75-69 as a demonstration against judicial activism.
Business interests like the the Texas Association of Manufacturers (TAM) are alarmed however that the bill may wreck havoc on the worker’s compensation system. Luke Bellsynder, the Executive Director of the TAM was quoted in Texas Insider as warning that the new law will discourage the purchase of worker’s compensation insurance, thus providing less overall capital to the system, and create “vulnerabilities” for property owners.
Workers deserve the full right to protection under the law for injuries sustained as a result of the negligence of others. At the same time the American legal system has long recognized that the commonality of claims in work related injuries was best served by a system based upon a compromise where workers threshold to prove injury was lowered and the employers liability costs regulated except in extreme cases. There are some cases of catastrophic injury were opponents are correct that the system may fall short. Cutting out abuse in minor injury claims and directing those funds to those with real and severe injuries is a necessary reform.
The Texas legislature’s response to perceived judicial excess is potentially an example of good government in action. However, in its fervor to demonstrate that the right of legislative authority rests solely within the representative body rather than the judicial extreme care must be taken not to open a new unintended consequence of lawsuit mania. Before this initiative is finalized, the legislature must investigate the consequences of this new action on business liability costs and insurance availability.
The Texans for Lawsuit Reform commissioned a study by the Stradian Group which shows that the associated costs of third-party litigation in workers’ compensation cases exceed $300 million annually. Liability costs ultimately are paid by consumers as the costs of doing business are passed along into the selling price of services and products.
Although critics complain that removing workers compensation restrictions from work related injuries would help workers studies show few workers benefit from third-party litigation in workers’ compensation cases. The Stradian Group report found that 187,000 compensable injuries occurred in Texas between 2000 and 2003, but only 397 plaintiffs, or fewer than 100 a year, collected more benefits than provided by workers’ compensation insurance.
The best interests of workers and business will be served by a set of laws and regulation that will allow affordable and available insurance coverage for business to cover worker injuries. The concern of business interests that the new law may significantly change the dynamics of how this coverage is provided cannot and should not be ignored. In the current situation of high unemployment and business failure the state of Texas cannot sustain a new epidemic of lawsuits and the potential for soaring liability insurance costs.
Thanks for reading Contempo Magazine blog which discusses issues for McAllen, the Rio Grande Valley, and America from a conservative Hispanic point of view. Tony Magaña grew up in McAllen Texas, attended Texas A&M University, served as an officer in Army Reserve, and holds a doctorate from Harvard University. The co-founder of Contempo Magazine has participated in Valley business for over 20 years. He is a member of the National Association of Hispanic Journalists and also writes for the American Daily Review. Follow him on twitter http://twitter.com/contempomagazin
