Employers: Are You Completely Protected by the Workers’ Compensation Bar?

September 2017

True or False: As an employer, you are wholly protected by the Texas Workers’ Compensation Scheme in the event an employee’s resulting injury is death?

False. In Texas, family members asserting a claim based on the death of an employee are not subject to the exclusivity bar if the employer is found to be grossly negligent.

What does it mean to be grossly negligent? What acts or omissions equate to an “extreme risk” and an actual awareness of, and indifference to, such a risk? These questions have been repeatedly deliberated in Texas, particularly in asbestos litigation, and most recently by the Fifth District Court of Appeals in Goodyear Tire & Rubber Company v. Rogers, 2017 Tex. App. LEXIS 8382.

In the Rogers case, family members of Mr. Rogers sued Goodyear, his employer from 1974 to 2004, alleging that asbestos fibers caused his mesothelioma and that his subsequent death resulted from Goodyear’s gross negligence. The jury found for the plaintiffs and awarded exemplary damages. On appeal, the court held:

(1) there was sufficient evidence of Goodyear’s gross negligence; and

(2) the exemplary damages should be reduced because the plaintiffs did not prove certain alleged economic damages.[i]

Establishing Gross Negligence Against an Employer

The Texas workers’ compensation scheme provides the exclusive remedy for an employee’s work-related injury or death, unless the death was caused by the employer’s gross negligence. See Tex. Lab. Code § 408.001. To establish gross negligence, a plaintiff must prove by clear and convincing evidence that:

(1) when viewed objectively from the defendant’s standpoint at the time of the event, the act or omission involved an extreme degree of risk, considering the probability and magnitude of the potential harm to others; and

(2) the defendant had actual, subjective awareness of the risk involved, but nevertheless proceeded with conscious indifferenceto the rights, safety, or welfare of others.See U-Haul Int'l, Inc. v. Waldrip, 380 S.W.3d 118, 137–39 (Tex. 2012) (emphasis added); see also Tex. Civ. Prac. & Rem. Code § 41.001(11).

Under the objective prong, an extreme degree of risk “is not a remote possibility or even a high probability of minor harm, but rather the likelihood of the plaintiff’s serious injury.”Rogers, 2017 Tex. App. LEXIS 8382, *15. Although the court in Rogersacknowledged that the risk must be extreme, the holding in that case suggests that the risk can be low as long as the magnitude of harm (which is only part of the analysis) is high (e.g., death). This is contrary to the reasoning in Altimore, which (i) required not just a “possibility” of harm, but rather proof that serious injury to the Plaintiff was likely, and  (ii) acknowledged that there may be no extreme risk, due to lack of a high probability, even if someone suffered a grave injury. See Exxon Mobil Corp. v. Altimore, 256 S.W.3d 415, 418 (Tex.App.—Houston [14th Dist.] 2008, no pet.).  Further, Altimore clarified that an employer’s generalized knowledge of a particular risk or similar risk is not sufficient to establish awareness of an extreme risk to the person at issue. Id. at 421-25.

Mesothelioma is a rare form of cancer. In Rogers, the court noted that “[a] person who has not been exposed to asbestos has a one in 1,000,000 chance of contracting mesothelioma.”2017 Tex. App. LEXIS 8382, *10. The plaintiff’s expert determined that the decedent’s exposure increased his risk of developing mesothelioma approximately 4 to 22 times, which calculated to approximately one in 45,000 to 250,000. Id. Even engaging in a statistical analysis specific to the Goodyear plant at issue, the probability was still only one in 740 to 1,500.[ii] To put this in perspective, even in conditions with one of the highest levels of occupational exposure—asbestos insulation workers during the 1940s through 1970s—the probability of dying from mesothelioma is one in 100.[iii] Accordingly, the numbers in Rogers, when viewed objectively, cannot be classified as “extreme.” Thus, in opposition to recent case law, if there is a chance, even the slightest possibility, of a risk, it is classified as extreme if the harm is so grave (e.g., death). This potentially subjects employers to a vast range of liability.

The subjective prong requires proof that the defendant had actual, subjective awareness of the risk involved but nevertheless proceeded with a conscious indifference to the rights, safety, or welfare of others. See Diamond Shamrock Ref. Co., LP. v. Hall, 168 S.W.3d 164, 170-171. In Hall, the court analyzed evidence of the defendant’s conduct while focusing on the specific risk and specific danger—an explosion. Id. Though there was evidence of prior explosions on the same line, the explosion did not occur in the same manner. The crux of the court’s analysis focused on the defendant’s actual state of mind and what it actually believed concerning the very specific risk involved, not merely a similar or generalized danger.

In conflict with more recent opinions,Rogerssuggests that as long as there is a generalized showing of knowledge that a dose (regardless of the quantity) causes an asbestos-related disease, an employer is deemed to have actual, subjective knowledge that the person at issue will contract mesothelioma.[iv] A specific dose and the differences in dose and knowledge in relation to asbestosis versus mesothelioma were not considered when analyzing the state of mind or whether acts demonstrated a conscious indifference.

What does it all mean?

In light of this most recent decision, an employer may be subject to liability, outside of the protection of the workers’ compensation scheme, for a generalized knowledge that someone, somewhere, at some time will be harmed and subject to liability for any risk (not necessarily extreme) of contracting a rare, though serious, disease if the result is essentially death.

[i] Though not discussed in depth in this Article, the court’s analysis of “exemplary damages” is important for employers. As Goodyear was found to be grossly negligent, the appellees could recover exemplary damages subject to the limitations strictly provided by the Texas Civil Practice and Remedies Code. Section 41.008(b) caps exemplary damages at (1) the greater of $200,000 or (2) two times the amount of statutorily defined “economic damages” plus up to $750,000 in noneconomic damages. As the first prong was inapplicable, the Court focused on the limits in the second prong. Under the statutory definitions, economic damages are those compensating an “actual economic or pecuniary loss.” Thus, the Court reasoned that “‘actual economic or pecuniary loss[es]’ means those types of losses that are supported by evidence of an existing in fact, real monetary loss like lost wages, lost profits, or the increased expenditures associated with obtaining replacement or new services.” Rogers, 2017 Tex. App. LEXIS 8382, *34.

Goodyear argued, and the court agreed, that exemplary damages should be reduced from $2,890,000 to $1,150,000—$400,000 (consisting of $170,000 in undisputed economic losses (medical expenses) plus $30,000 of the maximum pecuniary loses for the wife times two) plus the $750,000 cap to noneconomic losses found by the jury. The court noted that exemplary damages are assessed to punish a defendant, not to compensate plaintiffs for their damages. The wife’s testimony regarding his work around the house, including painting, putting up wall paper, tearing up old flooring, working on the family cares, etc., was too vague and speculative to support the $600,000 assessed by the jury in actual pecuniary losses. The only sufficient evidence that the wife suffered any loss was her testimony regarding the lawn care services, for which she had to pay around $55 per week. Assuming Rogers performed yard work 27 weeks a year for 15 additional years, the testimony supported a finding of at minimum $22,500 in damages. Thus, the court reduced the exemplary damage award.

[ii] The study conducted at the Goodyear plant found approximately four out of 3,000 hourly white men contracted mesothelioma. However, the court noted that two of those workers previously worked in a plant that manufactured asbestos insulation.

[iii]See generally, Irving J. Selikoff, Mortality Experience of Insulation Workers in the United States and Canada, 1943-1976, Annals New York Academy of Sciences, 91-116 (1979). The report notes 2271 deaths among 17,800 asbestos insulation workers. Of the 2271 deaths, only 175 were due to mesothelioma.

[iv]The Rogers opinion is more in line with earlier case law. Prior to Altimore and Hall, the opinions in Moore and Ellenderfocused on a more generalized awareness rather than specific. See generally, Brown & Root v. Moore, 92 S.W.3d 848 (Tex. App.—Texarkana 2002, pet. denied); Mobil Oil Corp. v. Ellender, 968 S.W.2d 917 (Tex. 1998).