The common theory in Texas, and maybe Oklahoma soon, is that the employer has an advantage when a nonsubscriber using benefit plans and arbitration to govern dispute resolution.
But that's not entirely true and an employer will be paying damages, perhaps significant damages, if the trier of fact, even an arbitrator, finds that the employer has a responsibility to an employee for work injuries.
Ricky Guzman, a machine operator for Forged Components, was hit by a forklift by a coworker who accidentally backed into him, crushing Guzman's lower left leg. Emergency personnel flew Guzman to a Houston hospital, where he stayed for 27 days as doctors performed a fasciotomy and grafting to repair Guzman's leg.
Forged quickly obtained a urine sample while Guzman was in the hospital, which tested positive for marijuana and cocaine. The employer raised an intoxication defense and denied medical benefits.
Guzman filed a negligence suit against the nonsubscribing employer, and Forged Components filed a motion to compel the case into arbitration, citing its benefit plan. The trial court denied the motion to compel.
One week later, the parties agreed to arbitrate the claim anyway and decided to formalize the agreement under Rule 11 of the Texas Rules of Civil Procedure. Forged's attorney sent Guzman's attorney a "Rule 11" letter stating that they had agreed to submit the matter to Judge Katie Kennedy of Judicial Workplace Arbitrations. The letter agreement was signed and returned to Forged's attorney, but despite creating the letter, Forged never signed the Rule 11 agreement.
Months later, Kennedy awarded Guzman $1.3 million, after determining that the plaintiff was not intoxicated at the time of his injury because the presence of THC metabolites does not establish intoxication at the time of injury and there was no evidence to indicate such.
Forged didn't like the outcome of the arbitration, so it filed a motion asking the 55th District Court of Harris County to vacate the award. The court denied the motion and awarded Guzman interest on the award.
Forged appealed, and on Tuesday, the 1st District Court of Appeals affirmed the $1.3 million award but denied Guzman interest on the award.
Forged contended that the Rule 11 agreement was unenforceable because the Texas Arbitration Act requires both parties to sign an arbitration agreement, and Forged had never signed the agreement.
The appellate court determined that the Federal Arbitration Act did apply, however, which did not require both parties to sign the Rule 11 agreement, and deemed it enforceable.
Forged also argued, in what I would characterize as a desperate attempt to avoid the award, that the trial court should have granted its original motion to compel arbitration under its nonsubscriber plan, rather than the arbitration under the Rule 11 agreement.
The appellate court said that there was no difference between the two and that both arbitration proceedings were essentially the same.
In Texas, you either have workers' compensation insurance, or you don't. If you don't, then you have to face liability as determined by civil law.
And this is what makes Texas such a great state in modern times because it serves as a reminder to all of the employers out there that complain about workers' compensation - just look at the alternative...
Workers' compensation schemes are nothing more than a mechanism for allocation of risk. We may tweak how that risk is determined, or what the size of that risk is, or whether one employer's operation constitutes a greater risk than another - but at the end of the day it's all about sharing the burden.
What makes modern economies hum is that humans are social in nature. We all need each other and collectively we create an order that is much bigger than the sum of its individual parts.
Everyone shares the risk of building an economy - the support system that enables mankind to live longer, fuller lives and advance the species to new levels of function and prosperity.
As a consequence, everyone also shares in the rewards - no single employer is, theoretically, burdened by a single catastrophic event that would put people, who otherwise may have nothing to do with the catastrophe, out of work.
I had lunch with an industry friend the other day - someone that has been in workers' compensation even longer than me and someone that is, in my opinion, much more intelligent than me.
My friend offered, between bites of his tri-tip sandwich, that he felt that workers' compensation was truly an important piece to modern, progressive economies and that without this mechanism of sharing the risk (and reward) business would be much less predictable, and much more volatile - ergo the economy would also share those same characteristics.
I tend to believe that is a truism - workers' compensation is a small industry in the grand scheme of things, but is essential to successful, global economies. The form, shape, operative rules, etc. may differ from one economy to another, but in the end it is this obligation to the social order that provides economic vitality.
The Texas case above is out of the 1st District Court of Appeals, titled Forged Components v. Ricky Guzman, NO. 01-11-00563-CV (06-25-2013).