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In Halferty v. Flextronics America, LLC, No. 13–16–00379–CV, 2018 WL 897979 (Tex. App.—Corpus Christi Feb. 15, 2018), the Corpus Christi Court of Appeals held that Flextronics, as the general contractor, did not “provide” workers’ compensation insurance coverage to its subcontractors for purposes of section 406.123(a) of the Act merely by requiring a subcontractor to obtain workers’ compensation insurance coverage; and therefore, it was not entitled to claim the exclusive remedy defense in response to a suit filed against it by a subcontractor’s employee.
Flextronics contracted with Titan Datacom, Inc. to install data cabling at a Flextronics Facility. In the agreement, Titan agreed to provide workers’ compensation insurance coverage for the project. Titan contracted with another company, Outsource, to assist in the data cabling. Both Titan and Outsource had workers’ compensation coverage for their employees.
As bad luck will have it, an Outsource employee, Patrick Halferty, sustained a work injury when he was accidentally knocked off a ladder by a Flextronics employee.
Mr. Halferty obtained workers’ compensation benefits from Outsource’s insurance carrier. He also sued Flextronics for his injuries. Flextronics filed a summary judgment motion arguing that Mr. Halferty’s suit was barred by the Act’s exclusive remedy defense because, as the general contractor, it was Mr. Halferty’s employer pursuant to section 406.123(a) of the Act.
The court held that to be entitled to the exclusive remedy defense, section 406.123(a) required Flextronics to do something more than “simply passing the onus of obtaining coverage to the subcontractor.” The court suggested the “more than” might include providing for an alternate insurance plan in which Flextronics would provide coverage in the event that is subcontractors failed to obtain insurance. Or, the “more than” might include enforcement mechanisms built into its contract with subcontractors “—such as withholding payment, or deducting insurance premium costs—that would trigger in the event that the subcontractors failed to provide coverage to its employees.”
James Loughlin, Stone Loughlin & Swanson, LLP.