BRS Prevails on Insurance Coverage Question of First Impression in the Fifth Circuit
September 22, 2010On September 21, 2010, the United States Court of Appeals for the Fifth Circuit issued a decision in an important insurance coverage case, deciding a question of first impression under Texas law in favor of our clients. The Fifth Circuit concluded that a standard-form exclusion for obligations arising under worker's compensation law does not exclude coverage for negligence claims against Texas employers who elect not to subscribe to the Texas worker's compensation system. This ruling was a significant victory for our clients, and for all Texas businesses in similarly-situated positions.
The underlying litigation arose out of a catastrophic industrial accident near Abilene, Texas. BRS partner Curt Webb and co-counsel Steve Clack of Kerrville, Texas, represented a gravely injured employee and secured a jury verdict of more than $10 million in favor of our client, shattering all prior records for the county. That judgment was upheld on appeal by the Eastland Court of Appeals. But the employer's insurance carrier refused to pay the judgment, taking the position that a worker's compensation exclusion in its liability policy excluded coverage in this non-subscriber negligence case. That question had never been decided by the Texas Supreme Court, nor had it been addressed by the Fifth Circuit. In this decision, the Fifth Circuit squarely holds that non-subscriber negligence claims are not obligations under the worker's compensation laws, and thus are not excluded from coverage by the standard-form worker's compensation exclusion. BRS partner David Jones handled the insurance coverage litigation in the district court, and BRS partner Russell Post handled the appeal to the Fifth Circuit.