Strong Reaction Reported Against Texas Supreme Court Decision

A couple of months ago, I commented on the Texas Supreme Court's decision in Entergy Gulf States v. Summers (see Premises Owners May Obtain Exclusive Remedy) which construed Sec. 406.123 of the Texas Labor Code to allow a premises owner (in this case a refinery) to agree in a written subcontract to pay premiums on workers' compensation insurance protecting the subcontractor's employees, and in return receive the benefit of the bar against common law negligence lawsuits by those employees.  Nobody questions this arrangement between a general contractor and a subcontractor.  The only controversy was whether a premises owner could function as its own general contractor.  The Entergy court held that it could even though the labor statute explicitly prohibited this before the 1993 recodification of the Labor Code.

Now it appears this decision has set off a minor fire storm of sorts.  In Monday's edition of the Quorum Report, which reports on Texas politics, a story appeared that certain Texas Legislators were surprised and shocked that the Supreme Court would interpret the recodification to effect a substantive change in the law.  See Quorum Report.  "Recods," as they are called are not supposed to create new law or make substantive changes in existing law.  In the Entergy case, the Court acknowledged this precept but held that the plain wording of the statute controlled.  What are the Legislators exercised about?

Robert Duncan (R- Lubbock) is quoted as saying that the Legislature has had multiple opportunities to extend the workers' compensation bar to premises owners but has opted not to.  In this view, the Supreme Court has created a new kind of immunity for a much broader class than was intended.

Admittedly, the Entergy decision could open the door to agreements between all sorts of players, landlords, retail operations, even homeowners (?).  However, the arrangement only applies if the premises owner purchases the workers' compensation insurance for the subcontractor's employees.  This arrangement occurs frequently in the oil patch and in the construction industry, and, for a number of reasons makes commercial sense.  So it remains to be seen what, if anything the Texas Legislature will do.  In the meantime, we might be on the look out for innovative agreements by parties trying to shoehorn into the Entergy immunity.