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<b><h2>Getting Schooled on Texas Subrogation</h2>
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<ul class="gmail-blog-grid-info"><li>06/18/18</li><li><a href="https://www.workerscompensation.com/news_author.php?author_id=113">Robert Wilson</a></li></ul></b>
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<p>I wrote a post last week entitled, “<strong><a href="https://www.workerscompensation.com/news_read.php?id=29676" target="_blank">For Texas Subrogation, the Devil is in the (Policy) Details</a></strong>.”
It concerned a Texas Supreme Court Decision where an insurance carrier
had attempted to collect from an injured workers' third-party liability
suit despite the existence of a waiver of subrogation in the policy
issued to their insured. The carriers position was that the waiver
applied to the protected business entity, but not to money paid to an
injured worker by that same entity. The court disagreed with their
position and ruled against them. </p>
<p>I questioned the wisdom of such a waiver, and while freely admitting I
did not know much in this arena, suggested that there may be a whole
lot of policy revision in Texas as a result of the decision. It turns
out I was indeed wrong – but not as much as some would like to think. </p>
<p>The morning the article was posted, an attorney friend in Austin
texted me. It essentially said, “Call me, and I'll tell you why the
court was right, and you were wrong.” In that subsequent call, he
explained that the waiver in question has been used for many years and
is endorsement language dictated by the Texas Department of Insurance.
Used frequently in manufacturing, construction and the trades, it
reduces liability and is often required in business contracts between
vendors and service recipients. This raises the employer's workers' comp
premiums, which is an acceptable trade off given the benefits regarding
liability. </p>
<p>In my friend's opinion, the carrier in the case I wrote about was
“trying to be cute,” and do an end run around the waiver. He indicated
most watching the case expected the court to rule exactly as they did.
The Supremes supported the status quo; the precedent that had been in
place for at least two decades.</p>
<p>The waiver (WC 42 03 04 A), reads:</p>
<p><em><strong>TEXAS WAIVER OF OUR RIGHT TO RECOVER FROM OTHERS ENDORSEMENT </strong></em></p>
<p><em>This endorsement applies only to the insurance provided by the
policy because Texas is shown in Item 3.A. of the Information Page. </em></p>
<p><em>We have the right to recover our payments from anyone liable for
an injury covered by this policy. We will not enforce our right against
the person or organization named in the Schedule, but this waiver
applies only with respect to bodily injury arising out of the operations
described in the Schedule where you are required by a written contract
to obtain this waiver from us. </em></p>
<p><em>This endorsement shall not operate directly or indirectly to
benefit anyone not named in the Schedule. The premium for this
endorsement is shown in the Schedule. </em></p>
<p><em>Schedule</em></p>
<ol>
<li><em> ( ) Specific Waiver </em><br><em>Name of person or organization </em><br><br></li>
<li><em>Blanket Waiver </em><br><em>Any person or organization for whom the Named Insured has agreed by written contract to furnish this waiver. </em><br><br></li>
<li><em>Operations: </em><br><br></li>
<li><em>Premium </em><br><em>The premium charge for this endorsement
shall be ______ percent of the premium developed on payroll in
connection with work performed for the above person(s) or
organization(s) arising out of the operations described. </em></li>
</ol><ol start="5" type="1">
<li><em>Advance Premium </em></li>
</ol>
<p><em>Notes: </em></p>
<ol start="1" type="1">
<li><em>Use this endorsement to effect a waiver of recovery from others
in accordance with Rule II, Section G, of the Texas Workers'
Compensation Manual. </em></li>
<li><em>If blanket waiver of recover from others is written, the
following wording should be inserted following Operations in schedule:
All Texas Operations.</em></li>
</ol>
<p>The carrier, which we assume was earning additional premium for the
waiver, tried to subrogate their losses in an indirect manner that the
courts determined was in fact a direct attempt, and was not allowed by
the policy in force.</p>
<p>So, it appears, despite my normally spot on predictions (which are
right, like almost 50% of the time), that the policy language in the
state won't be changing anytime soon.</p>
<p>Our Austin attorney then pointed me to a more interesting subrogation
case in the state, and suggest I research it a bit. Earlier this year.
in <em>Ins. Co. of the State of Pennsylvania v. Roberts</em>, the Texas
Supreme Court declined to review a Court of Appeals decision that
allowed subrogation despite the existence of a waiver.</p>
<p>An <strong><a href="https://www.mwl-law.com/texas-supreme-court-denies-appeal-in-waiver-of-subrogation-case/" target="_blank">excellent review of that case</a></strong>
is provided by Gary L. Wickert, of Matthiesen, Wickert & Lehrer,
S.C. Essentially, an explosion at an Exxon facility resulted in a
subrogation attempt by AIG, which insured a vendor whose employees were
injured in the event. Initially the action was denied by the trial
court, which issued a summary judgment at Exxon's behest, citing the
subrogation waiver in the vendors policy. The Court of Appeals, however,
reversed the decision, based on the specific language of the contract
between the two companies. That document called for “certain waivers of
the insurers' subrogation rights against Exxon, ‘to the extent
liabilities are assumed by'” the vendor. According to Wickert, AIG
claimed “that the subrogation waiver endorsement was never ‘triggered'
because Savage never ‘assumed liability' for Exxon's negligence.” The
court agreed with that position.</p>
<p>Ah, those pesky little contractual details.</p>
<p>Wickert says in his blog that the Supreme Court's decision to let the
Appeals decision stand without review “establishes the Court of
Appeal's decision as good law and will serve as a boon to workers'
compensation subrogation efforts in Texas despite the ubiquitous
presence of waiver of subrogation endorsements.” </p>
<p>Initially, I had incorrectly speculated that there may be a great
deal of revision in insurance policy language as a result of the Supreme
Court decision discussed in last weeks post. I might have been wrong
about the specific document to be revised, but suspect I was right about
those potential revisions. Vendor services agreements all across the
Lone Star State may get another look due to the ramifications of <em>Ins. Co. of the State of Pennsylvania v. Roberts</em> decision.</p>
<p>And that was the lesson for me in this specific chapter. While it
turns out that in the world of subrogation waivers the devil may not be
in the policy details, he certainly exists in the syntactical world of
the standard service contract. </p>
<br clear="all"><br>-- <br><div class="gmail_signature" data-smartmail="gmail_signature">=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+<br><br> Harold F. Schiffman<br><br>Professor Emeritus of <br> Dravidian Linguistics and Culture <br>Dept. of South Asia Studies <br>University of Pennsylvania<br>Philadelphia, PA 19104-6305<br><br>Phone: (215) 898-7475<br>Fax: (215) 573-2138 <br><br>Email: <a href="mailto:haroldfs@gmail.com" target="_blank">haroldfs@gmail.com</a><br><a href="http://ccat.sas.upenn.edu/~haroldfs/" target="_blank">http://ccat.sas.upenn.edu/~haroldfs/</a> <br><br>-------------------------------------------------</div>
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