Franks v. Sematech, Inc.
| Decision Date | 10 January 1997 |
| Docket Number | No. 95-1151,95-1151 |
| Citation | 936 S.W.2d 959 |
| Parties | 40 Tex. Sup. Ct. J. 227 Charlie FRANKS and Industrial Indemnity Insurance Company, Petitioners, v. SEMATECH, INC. f/d/b/a Semiconductor Manufacturing Technology Initiative & Burle Industries, Inc., d/b/a Robot Industries, Inc., Respondent. |
| Court | Texas Supreme Court |
Paul E. Knisely, Michael Greenberg, Pete P. Gallego, J. Mark Holbrook, Austin, for petitioners.
Harley Clark, Beverly G. Reeves, Alysia Wightman, Gordon J. McHaney, Timothy Poteet, Austin, for respondent.
Does an employee's intervention in a workers' compensation carrier's subrogation action against third parties alleged to have injured the employee relate back to the filing of the subrogation action so as to escape the bar of limitations? The lower courts answered no. 938 S.W.2d 462. We disagree.
While working for Daw Technologies, Inc., Charlie Franks was struck by a security gate on the premises of Sematech, Inc. The gate was manufactured by Burle Industries, Inc. Daw's compensation carrier, Industrial Indemnity Insurance Co., paid Franks benefits. Section 417.001 of the Labor Code provides in part:
(a) An employee or legal beneficiary may seek damages from a third party who is or becomes liable to pay damages for an injury or death that is compensable under this subtitle and may also pursue a claim for workers' compensation benefits under this subtitle.
(b) If a benefit is claimed by an injured employee or a legal beneficiary of the employee, the insurance carrier is subrogated to the rights of the injured employee and may enforce the liability of the third party in the name of the injured employee or the legal beneficiary. If the recovery is for an amount greater than that paid or assumed by the insurance carrier to the employee or the legal beneficiary, the insurance carrier shall:
(1) reimburse itself and pay the costs from the amount recovered; and
(2) pay the remainder of the amount recovered to the injured employee or the legal beneficiary. 1
As authorized by this statute, Industrial Indemnity sued Sematech and Burle to recover the amounts it paid to Franks. The suit was filed within two years of the accident and thus not barred by limitations. TEX. CIV. PRAC. & REM.CODE § 16.003(a); Guillot v. Hix, 838 S.W.2d 230, 233 (Tex.1992).
Industrial Indemnity sued in its own name rather than Franks' and expressly disavowed any representation of Franks' interests or any recovery beyond the amounts paid Franks in benefits. More than four years after the accident, Franks intervened in Industrial Indemnity's suit to assert his own claims against defendants, essentially adopting Industrial Indemnity's allegations. On defendants' motions, the district court dismissed Franks' intervention as being barred by limitations, and then because Industrial Indemnity's subrogation claim was derivative of Franks' claim and Franks' claim was barred, the district court dismissed Industrial Indemnity's action. The court of appeals affirmed. 938 S.W.2d 462.
There is but one cause of action for an employee's injuries, and it belongs to the employee. Guillot, 838 S.W.2d at 232. If the employee claims compensation benefits, the insurance carrier is subrogated to the employee's rights against a third party who caused the injuries. Id.; TEX. LAB.CODE § 417.001(b). The carrier can assert its subrogation claim independently of the employee, id., but that claim is still derivative of the employee's claim. Guillot, 838 S.W.2d at 232, 235. The carrier can recover damages greater than the benefits it has paid but must remit the difference to the employee. TEX. LAB.CODE § 417.001(b).
It follows, then, that a carrier who asserts a subrogation claim asserts a claim that belongs to the employee. This is true irrespective of whether the carrier sues in its own name or the employee's name, or whether the carrier seeks recovery of all damages owed by the third party or disclaims recovery of damages exceeding the benefits it has paid or is obligated to pay. After limitations has run, a carrier who originally limited its demand to benefits paid could amend its pleadings to demand full recovery of all damages owed. TEX. CIV. PRAC. & REM.CODE § 16.068. There is no reason why the employee should not be able to accomplish the same result by intervening in the subrogation action, even after limitations has run, to claim full recovery from the third party. The employee's intervention should relate back to the filing of the subrogation claim, just as the carrier's amendment to...
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