HB 1468 by Rep. Kenneth Sheets (R-Dallas) and SB 926 by Sen. Joan Huffman (R-Houston) reverse a recent Texas Supreme Court decision holding that certain communications between a workers’ compensation carrier’s outside counsel and an employer with respect to a comp claim brought by the employer’s employee are not protected by the attorney-client privilege and may be discovered in a subsequent suit against the carrier.
In In re XL Specialty Insurance Company and Cambridge Integrated Services Group, Inc. (No. 10-960, June 29, 2012), the Texas Supreme Court ruled that the attorney-client privilege (Tex.R.Evid. 503(b)) does not apply to a communication between a lawyer representing a workers’ compensation carrier and the employer regarding an administrative proceeding regarding an employee’s workers’ compensation claim, when the employee subsequently files suit against the carrier and its third party administrator for breach of the common law duty of good faith and fair dealing and violations of the Insurance code and the Texas Deceptive Trade Practices Act. Thus, the employee could discover the prior communication between the insurer’s outside counsel and the employer.
HB 1468/SB 926 provide that a communication between a workers’ compensation insurance carrier and an employer, including those between the carrier’s or employer’s attorneys, sureties, consultants, employees, third-party administrators, and other agents, are confidential and privileged if the communications are: (1) in furtherance of the employer’s rights under the workers’ compensation statutes; (2) in anticipation of a judicial or administrative proceeding, including material prepared or mental impressions developed in anticipation of the proceeding; (3) for the purpose of facilitating professional services by the carrier to the employer. The bill further exempts any record of a communication privileged under the bill from the application of the Open Records Law (Chap. 552, Government Code).