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OCIP agreement did not prevent worker from suing property owner who failed to show that agreement was with worker’s employer, a subsidiary of a parent company.

It is a common misperception in the industry that the exclusive remedy defense prevents an employee of a subsidiary company from suing the parent company. It does not. The Dallas Court of Appeals makes this clear in Olivares v. Chevron, issued March 14, 2023. 

For a defendant to assert the exclusive remedy defense, the defendant must be the plaintiff’s employer.  However, the Dallas Court explains that employees of a subsidiary company are not by default also employees of the parent company and in fact, there is a strong presumption that a parent corporation is not the employer of its subsidiary employees. The court’s decision continues:

“An injured employee of a subsidiary corporation, who is estopped under an exclusive remedy provision in his state's workers’ compensation act from suing his employer, may nonetheless bring a third-party claim against the subsidiary's parent or sibling corporation.” Sims v. W. Waste Indus., 918 S.W.2d 682, 684 (Tex. App.—Beaumont 1996, writ denied) (cleaned up). “We are not persuaded that the legislature ever intended parent corporations, who deliberately chose to establish a subsidiary corporation, to be allowed to assert immunity under the Texas Workers’ Compensation Act by reverse piercing of the corporate veil they themselves established.” Id. at 686. 

The plaintiff in Olivares v. Chevron was employed by Apache Global, a subsidiary of Apache Industrial Services, Inc. Chevron sought to show that it had an owner-controlled insurance program (OCIP) with the plaintiff’s employer meaning that Chevron would also be considered his employer and therefore, could not be sued for his work injury.  The court held that Chevron failed to show that the OCIP was with Apache Global, the subsidiary company, rather than Apache Industrial, the parent company and because employees of a subsidiary company are not also employees of the parent company, the exclusive remedy defense did not prevent the plaintiff from suing Chevron.

Chevron presumably spent a lot of money to put this OCIP together to prevent it from being sued for work injuries on its premises and it was for naught. This case provides some good practice pointers for anyone working with OCIPs to make sure they are set up and administered properly.  

Copyright 2023, Stone Loughlin & Swanson, LLP