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Argonaut Insurance Company v. Baker6/20/2002
Argued on March 20, 2002
Justice Rodriguez delivered the opinion of the Court, in which Chief Justice Phillips, Justice Hecht, Justice Enoch, Justice Owen, Justice Baker, and Justice Jefferson join.
Justice O'Neill concurred in the judgment only.
Justice Hankinson filed a dissenting opinion.
In 1989, the Texas Legislature required every workers' compensation carrier to offer optional deductible plans to allow policyholders to "self-insure" for the deductible amount. Tex. Ins. Code art. 5.55C(a). Under such a policy, the carrier must make all payments for benefits to an injured employee, including those payable from the deductible amount. Id. art. 5.55C(d), (e). When a third-party tortfeasor causes the employee's injuries, the carrier is subrogated to the injured employee's rights against the tortfeasor, and the net amount recovered in a third- party action shall be used to reimburse the carrier for benefits that have been paid. Tex. Lab. Code ยงยง 417.001, 417.002. The issue presented is whether allowing the carrier to be reimbursed for benefits paid from the deductible violates Insurance Code article 5.55C section (f), which provides that an employee "may not be required to pay any of the deductible amount." Tex. Ins. Code art. 5.55C(f). The court of appeals held that it does. 36 S.W.3d 587. Because we hold that it does not, we reverse the court of appeals' judgment in part and remand to the trial court for further proceedings consistent with this opinion.
I. Facts
Anthony Baker, an employee of Flowers Construction Company, was injured in a collision with a truck driven by an employee of Rocha Trucking. Because he was injured in the course and scope of his employment, Baker filed a claim for workers' compensation benefits with Argonaut Insurance Company, Flowers' workers' compensation insurance carrier. At the time, Flowers had a deductible plan that provided for Flowers to self-insure the first $250,000 of loss arising from each work-related injury suffered by its employees. Under the policy, Argonaut would first apply any recovery from a liable third party to benefit payments made by Argonaut in excess of the $250,000 deductible, and the remainder of any recovery would be applied to reduce the deductible amount Flowers owed.
Insurance Code article 5.55C governs optional deductible plans such as the one Flowers purchased. Flowers' deductible plan provided for Argonaut to pay the full amount of each covered claim submitted by an employee, including any portion payable from Flowers' deductible, as mandated by article 5.55C: "A deductible policy must provide that the [carrier] will make all payments for benefits that are payable from the deductible amount and that reimbursement by the policyholder shall be made periodically, rather than at the time claim costs are incurred." Tex. Ins. Code art. 5.55C(d). Argonaut paid a total of $352,596.13 in workers' compensation benefits to and on behalf of Baker, including the $250,000 paid from the deductible.
Baker's wife sued Rocha Trucking and the truck driver on Baker's behalf for damages arising from the accident. Soon after, Argonaut intervened to assert its subrogation right, under the Labor Code, to recover from the defendants the $352,596.13 in benefits it had paid. The Bakers disputed Argonaut's entitlement to reimbursement for the $250,000 in benefits paid from Argonaut's deductible, arguing that it was forbidden by article 5.55C(f)'s mandate that an injured employee "may not be required to pay any of the deductible amount." Id. art. 5.55C(f). Rocha Trucking and its driver ultimately agreed to pay $882,000 to settle all claims asserted against them in the lawsuit
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