The Austin Court of Appeals has affirmed trial court order denying the Texas Political Subdivisions Joint Self-Insurance Fund’s (TPS Fund) plea to the jurisdiction and summary judgment motion in an administrative enforcement case initiated by the Texas Department of Insurance-Division of Workers’ Compensation.
Texas Political Subdivisions Joint Self-Insurance Fund v. Texas Department of Insurance-Division of Workers’ Compensation and Commissioner Cassie Brown in her Official Capacity (No. 03-22-00241-CV; filed October 31, 2023) arose from a pair of 2019 enforcement actions in which the DWC asserted that the TPS Fund failed to accurately pay death benefits, failed to timely or accurately report claims data, underpaid certain death benefits, and failed to timely benefits to an injured employee. The TPS fund filed pleas to the jurisdiction asserting governmental immunity from suit and liability for administrative penalties and sanctions. The administrative law judge denied the pleas on the basis that Chapters 408, 409, and 415, Labor Code, under which DWC acted, “contains a clear and unambiguous waiver of sovereign immunity for governmental entities that self-insure, either individually or collectively.” The ALJ then recommended that the TPS Fund pay $125,000 in penalties for the death benefits case and $7.500 in the injured-employee case. The commissioner duly issued orders incorporating the ALJ’s proposals for decision and assessed the penalties. The TPS fund sought judicial review in Travis County district court and once again asserted governmental immunity. The trial court denied the pleas, as well as the Fund’s motion for summary judgment.
In an opinion by Chief Justice Byrne, the court of appeals affirmed. The TPS Fund based its immunity argument on a 2019 amendment to § 504.053, Labor Code, which expressly waives immunity for sanctions, administrative penalties, and other remedies authorized by the Texas Workers’ Compensation Act, Chapter 415. The Fund argued that this amendment changed the law effective June 10, 2019, but did not waive immunity for previous violations. The DWC countered that the amendment merely codified or clarified existing law. The amendment in question was contained in SB 2551, which created a presumption of compensability for first responders’ death and disability claims based on certain cancers. The court of appeals interpreted the bill’s standard applicability clause, providing that claims filed and administrative violations that occurred before the effective date of the act were governed by law in effect on the date of those claims and violations to mean that “the Legislature directed that the Commission could not go back and seek administrative penalties under the new statutory scheme for carriers’ handling of cancer claims that were filed before the effective date of the Act, not that the Commission could for the first time seek penalties from self-insured political subdivisions.” The court went further, construing SB 2551’s bill analysis as making a “nonsubstantive change.” More generally, the court cited a number of cases indicating that political subdivisions do not have immunity from state enforcement actions, including administrative penalties under the Texas Workers’ Compensation Act.
Two things about this decision give us pause. First, in our view, the standard “commenced on or after the effective date” language in SB 2551 does not mean what the court of appeals says it does. The language added to § 504.053 provides that “[n]othing in this chapter waives sovereign immunity or creates a new cause of action, except that a political subdivision that self-insures either individually or collectively is liable for: (1) sanctions, administrative penalties, and other remedies authorized under Chapter 415; [and] attorney’s fees as provided by Section 408.221(c).” Prior to this amendment, a political subdivision’s liability was limited to “attorney’s fees so provided by Section 417.003.” If the Legislature merely meant to codify existing law as to administrative penalties, why would it have added this language to the statute and used the prospective effective date language generally included in every statute that creates a new remedy, damages, or penalty?
The court of appeals’ reliance on the bill analysis doesn’t seem to hold up either because the plain text of the effective date clause controls, not the title of a section of a bill analysis. Additionally, the court of appeals’ reading of the statute to mean “that the Commission could not go back and seek administrative penalties under the new statutory scheme for carriers’ of handling cancer claims that were filed before the effective date of SB 2551” doesn’t make sense because the bill established the cancer presumption and the new process only for claims filed on or after the effective date. How could the Commission “go back” and seek penalties for violations of a law that was not in effect at the time of the violation? In any event, we’ll see if the TPS Fund takes this up to SCOTX.
