Texas Mun. League v. Workers' Comp. Com'n
| Decision Date | 04 April 2002 |
| Docket Number | No. 00-1114.,00-1114. |
| Citation | 74 S.W.3d 377 |
| Parties | TEXAS MUNICIPAL LEAGUE INTERGOVERNMENTAL RISK POOL, Petitioner, v. TEXAS WORKERS' COMPENSATION COMMISSION and Subsequent Injury Fund, Respondents. |
| Court | Texas Supreme Court |
William J. Cobb, Robbi B. Hull, Jim David Bickham, Vinson & Elkins, Jack W. Latson, Flahive, Ogden & Latson, Austin, for petitioner.
John Cornyn, Attorney General of the State of Texas, Andy Taylor, First Assistant Attorney General, Joseph A. Pitner, Linda Eads, Don Walker, Office of the Attorney General of Texas, Austin, for respondent.
This case involves the Texas Workers' Compensation Subsequent Injury Fund and the Texas Municipal League Intergovernmental Risk Pool. The issue is whether the Fund and the regulations implementing the Fund are unconstitutional as applied to the Risk Pool, because they either require Texas cities to make gratuitous payments to individuals, associations, or corporations, or because they impose a statewide ad valorem tax. See Tex. Const. art. III, § 52(a), art. VIII, § 1-e.
The trial court determined that sections 403.007(a) and 408.184(c) of the Texas Labor Code and the implementing regulations violate both constitutional provisions. The court of appeals concluded that, because the provisions are analogous to custodial-escheat statutes, they are constitutional. 38 S.W.3d 591. The court of appeals thus reversed the trial court's judgment and rendered judgment in the Texas Workers' Compensation Commission's favor. 38 S.W.3d at 600. We agree the provisions are constitutional, but not for the reasons the court of appeals articulated. Accordingly, we affirm the court of appeals' judgment.
The Texas Municipal League Risk Pool includes more than 1,600 Texas cities providing workers' compensation benefits to their employees through a joint-insurance fund. The cities formed the Risk Pool under the Labor Code, which requires all political subdivisions to provide their employees workers' compensation benefits by (1) becoming a self-insurer, (2) obtaining an insurance policy, or (3) joining with other political subdivisions to self-insure through a joint-insurance fund. Tex. Lab. Code §§ 504.011, .016. According to its bylaws, the Risk Pool's objectives are to formulate, develop and administer a self-insurance program for its members, to obtain lower costs for workers' compensation coverage, and to develop a comprehensive safety program.
The Risk Pool charges its member cities contributions based on a "modifier system." Under this system, the Risk Pool's Board of Trustees requires its member cities to contribute a standard rate for each job classification. The cities' contributions go to a common fund, which the Risk Pool uses to pay for its member cities' workers' compensation claims and administrative expenses. The Risk Pool also invests its member cities' contributions and combines any investment returns with the existing funds available for benefits.
Every eighteen months, the Risk Pool's Board analyzes each member city's five-year claims history to determine the future contributions the city must make. Depending on each city's claims history, the Board assigns a modifier to adjust each city's contributions. If the city's claims history is good, the Risk Pool offers a discount on contributions and returns money as "equity" to the eligible cities.
In 1997, the TWCC directed the Risk Pool to pay its unclaimed death benefits to the Subsequent Injury Fund, as Labor Code sections 403.007(a) and 408.184(c) require. The Risk Pool paid $85,000 before halting its payments. The Risk Pool then sought declaratory relief that Labor Code sections 403.007(a) and 408.184(c), and the rules the TWCC promulgated under those sections, are unconstitutional. Specifically, the Risk Pool claimed the provisions, as applied to the Risk Pool, violate Texas Constitution article III, section 52(a), which prohibits the Legislature from authorizing any state political subdivision to lend its credit or to grant public money to any individual, association or corporation. The Risk Pool also alleged the provisions, as applied to the Risk Pool, violate Texas Constitution article VIII, section 1 e, which prohibits the State from levying an ad valorem tax on any property within the State.
The trial court determined that the provisions violated both sections of the Constitution. The court of appeals reversed and rendered in the TWCC's favor. It held that the provisions are not unconstitutional because they operate like custodial-escheat statutes. 38 S.W.3d at 598. The court of appeals reasoned that because the challenged provisions only transfer custody of, and not title to, the Risk Pool's funds, the "escheat" of the unclaimed death benefits can be neither a "lending of credit" that article III, section 52(a) prohibits nor a "recapture of local taxes" that article VIII, section 1 e prohibits. 38 S.W.3d at 598.
We granted the Risk Pool's petition for review to consider: (1) whether the challenged provisions operate like custodial-escheat statutes; (2) whether the challenged provisions violate Texas Constitution article III, § 52(a); and (3) whether the challenged provisions violate Texas Constitution article VIII, § 1-e.
The Fund, originally established in 1947 as the Second Injury Fund, is a special TWCC-administered account in the state treasury. Tex. Lab.Code § 403.006(a). The Legislature established the Fund to pay lifetime workers' compensation benefits to injured employees and to encourage employers to hire people with disabilities or preexisting injuries. Miears v. Industrial Accident Bd., 149 Tex. 270, 232 S.W.2d 671, 673 (1950). Under Labor Code section 402.061, which authorizes the TWCC to adopt regulations to enforce the Texas Workers' Compensation Act, the TWCC has adopted regulations to implement the Fund. 28 Tex. Admin. Code §§ 132.10-.12.
The Fund pays workers' compensation benefits when an injured employee suffers a compensable injury that, when combined with a previous injury's effects, results in a condition that entitles the employee to lifetime benefits. See Tex. Lab.Code § 408.162(a). Thus, if an employee suffers a subsequent compensable injury, the employer must pay benefits for that injury only to the extent that the injury would have entitled the employee to benefits had the previous injury not occurred. Tex. Lab.Code § 408.162(a). Then, the Fund pays for the claimant's remaining lifetime benefits. Tex. Lab.Code § 408.162(b).
To subsidize the Fund, Labor Code sections 403.007(a) and 408.184(c) require insurance carriers to contribute to the Fund any unclaimed death benefits not distributed under Labor Code section 408.182. See also 28 Tex. Admin. Code § 132.10(a). Section 408.182 lists the beneficiaries eligible to receive benefits if an employee suffers a compensable injury that results in a death. Tex. Lab.Code § 408.182; see also 28 Tex. Admin. Code § 132.10(a). If a beneficiary on the list does not exist or does not timely claim the benefits, a workers' compensation carrier must then contribute those benefits to the Fund. Tex. Lab.Code §§ 403.007(a); 408.182(e); see also 28 Tex. Admin. Code § 132.10(a).
Ordinarily, a beneficiary must file a claim for death benefits within one year of an eligible employee's death. Tex. Lab. Code § 409.007(a). If the beneficiary does not file a claim within one year, the claim is barred unless the beneficiary is a minor or incompetent or good cause exists for the beneficiary's failing to file a claim. Tex. Lab.Code § 409.007(b). But, for purposes of financing the Fund, the Labor Code presumes that no legal beneficiary survives the employee if a death-benefits claim is not filed with the TWCC within one year of the employee's death. Tex. Lab.Code § 403.007(c); see also Tex. Admin Code § 132.10(h). This presumption applies unless the beneficiary is a minor or an incompetent lacking an appointed guardian. Tex. Lab.Code § 403.007(c); see also Tex. Admin Code § 132.10(i).
If possible, we construe a statute in a manner that renders it constitutional and gives effect to the Legislature's intent. See Quick v. City of Austin, 7 S.W.3d 109, 115 (Tex.1998); Liberty Mut. Ins. Co. v. Garrison Contractors, Inc., 966 S.W.2d 482, 484 (Tex.1998). We presume that the Legislature intended for the law to comply with the United States and Texas Constitutions, to achieve a just and reasonable result, and to advance a public rather than a private interest. Tex. Gov't Code § 311.021; Spence v. Fenchler, 107 Tex. 443, 180 S.W. 597, 605 (1915). Nevertheless, the Legislature may not authorize an action that our Constitution prohibits. See Maher v. Lasater, 163 Tex. 356, 354 S.W.2d 923, 925 (1962); Travelers' Ins. Co. v. Marshall, 124 Tex. 45, 76 S.W.2d 1007, 1009 (1934). The burden is on the party attacking the statute to show that it is unconstitutional. See Texas Pub. Bldg. Auth. v. Mattox, 686 S.W.2d 924, 927 (Tex. 1985).
In an as-applied constitutional challenge, we must evaluate the statute as it operates in practice against the particular plaintiff. See Texas Workers' Comp. Comm'n v. Garcia, 893 S.W.2d 504, 518 n. 16 (Tex.1995). In construing the statute and its effect, we consider several factors, including: the statute's purpose; the circumstances of the statute's enactment; the legislative history; common-law or former statutory provisions, including laws on the same or similar subjects; a particular construction's consequences; administrative construction of the statute; and the title, preamble and emergency provision. Tex. Gov't Code § 311.023; Ken Petroleum Corp. v. Questor Drilling Corp., 24 S.W.3d 344, 350 (Tex.2000).
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