In a case with critical consequences for the hard-fought improvements to the workers’ compensation system since 1989, the Texas Supreme Court today ruled that a court-approved settlement between an employee and the employer’s workers’ compensation carrier must comply with the specific statutory formulas for calculating supplemental income benefits (SIBs).
TCJL participated in the case, Texas Department of Insurance, Division of Workers’ Compensation v. Bonnie Jones and American Home Assurance Company (No. 15-0025) as amicus curiae at both the Petition for Review and consideration stages. TCJL’s first brief argued that Dallas Court of Appeals erred in affirming a trial court judgment that disregarded explicit provisions of the Texas Workers’ Compensation Act applying to a claim for supplemental income benefits. In doing so, the Court infringed on the Legislature’s prerogative to establish the specific conditions that determine eligibility for benefits and the public policy objectives that a claimant to make a serious effort to return to employment as soon as possible after a workplace injury. The Court of Appeals’ decision also threatened to reopen the system to a new stream of litigation that would raise the cost of workers’ compensation insurance and make it more difficult for employers to provide workers’ compensation coverage for their employees. The second brief, filed after SCOTX accepted review, urged the Court to consider the legislative history of workers’ compensation reform and the public policy implications of judicially modifying the legislatively prescribed system of benefits under the Act.
Writing for an 8-1 majority, Justice Don Willett opined that the workers’ compensation act “provides a tight framework for court approval of workers’ compensation settlements” (6). Consequently, settlements must comply with the specific formula for calculating the amount of SIBs contained in the statute. Any settlement deviating from the statutorily-prescribed calculation must be set aside. As Justice Willett stated, “Courts cannot approve a settlement for a dollar value that is not ‘equal to’ the output of the formula as applied to facts particular to the injured employee, such as his average weekly wage” (9).
The opinion further engages in an analysis of the legislative policy objective of workers’ compensation reform: to reduce litigation in small dollar claims. Noting that prior to the reform of the trial de novo standard attorney involvement in workers’ comp claims was six times higher than in many states, the Court held that “settlement of workers’ compensation disputes is tightly restricted to only those settlements that strictly comply with the meticulous governing Code provisions at hand. SIBs awards are typically relatively small compared with the costs of going to trial, and as a result are particularly vulnerable to the sort of nuisance suits that the Legislature sought to curb. If an injured worker is not eligible for SIBs, but is aware that the employer’s insurer would rather pay some fraction of the formula’s output instead of going to trial to prove the suit non-meritorious, there is a perverse incentive to appeal any of the Division’s decisions not to award SIBs. It is this sort of opportunism that the Code is designed to curtail” (10-11).
We applaud the Court’s opinion and its continued consistency in applying statutes as they are written. We also commend the Court for recognizing the complexity of legislative policy decisions and the necessity of judicial restraint in cases of major policy import.