Intergovernmental Risk Pool Not Immune from Being Fined by DWC
The Texas Third Court of Appeals in Austin rejected arguments by the Texas Political Subdivisions Joint Self-Insurance Fund (TPS Fund) that DWC could not fine it for violating the Workers’ Compensation Act. The TPS Fund describes itself as a political subdivision of the State that operates as a risk-management pool and workers’ compensation claims administrator for its members, which are public-school districts, counties, cities, and other units of local government.
DWC issued orders fining the TPS Fund a total of $132,500 for nonpayment or late payment of benefits to injured employees. The TPS Fund argued that as a political subdivision of the State, governmental immunity protects it from fines by DWC unless the legislature waives its immunity, which it says the legislature had not done for these violations, which were committed prior to a change in the law.
The gist of the TPS Fund’s argument was that prior to June 10, 2019, the legislature had not waived political subdivisions’ immunity for fines by DWC. Effective June 10, 2019, the legislature added language to section 504.053(e) of the Act expressly waiving political subdivisions’ governmental immunity “for sanctions, administrative penalties, and other remedies authorized by Chapter 415 [the section of the Workers’ Compensation Act governing administrative violations].”
The TPS Fund argued that this newly added statute represented a change in existing law while DWC argued that the statute merely codified or clarified existing law and that there was already a waiver of governmental immunity prior to this statute. The Austin Court of Appeals agreed with DWC citing its own prior holding in a case from 2000 holding that political subdivisions that self-insure under the Workers’ Compensation Act are subject to fines by DWC.
Part of the court’s rationale in that case was that “If a subdivision chooses to provide [workers’ compensation] benefits through self-insurance, then the subdivision falls under the Act’s definition of insurance carrier,’ which expressly includes ‘a governmental entity that self-insures, either individually or collectively.’” In other words, the legislature made it clear that if a subdivision elects to self-insure, they are also subject to DWC’s regulations. They have to take the bitter with the sweet.
You can read the Court’s decision here:
TPS Fund v. TDI-DWC.
