Untitled Texas Attorney General Opinion ( 1949 )

TEIEATCORNEYGENERAI.
OFTEXAS
Hon. Joe P. Gibbs
Casualty Insurance Commissioaer
Board of Insurance Commissioners
Austin, Texas
Opinion NO. V-807
Re: Legality of a waiver of
Subrogation Endorsement”
.uaaer Art. 0307, Sec. 6a,
Revised Civil Statutes
of Texas
Dear Commissioner Gibbs:
Your request for an opinion is in part as
follows:
“This Department has reoeived several
requests for approval of the following or a
similar endorsement to be attached to Work-
men’s Compensation policies:
“‘It is understood and agreed that
the company hereby waives the right
of subrogation under the policy to
which this endorsement is attached I
against the .1
Name of Employer
“In view of the section of the’ Worknea~s
Compensation statute quoted above, can the
Board of Insurance Commissioners legally ap-
prove a ‘Waiver of Subrogation Endorsement
for attachment ~to Texas Standard Workmen’s
Compensation policies?”
Your request indicates that you are concerned
solely with the legality of the above endorsement as test-
ed by Article 8307, Sec. 6a, V.C.S. This opinion, there-
fore deals only with that question.
Art.iele-8307, Sec. .6a, V.C.S., ,~ provides:
“Where the injury for which compensation is
payable under this law was caused under circum-
Hon. Joe P. Gibbs, Page 2, V-807
stances creating a legal liability in some person
other than the subscriber to pay damages in re-
spect thereof, the employee may at his option
proceed either at law against that person to re-
cover damages or against the association for com-
pensation under this law, but not against both,
and if he elects to proceed at law against the
person other than the subscriber, then he shall
not be entitled to compensation under this law.
If compensation be claimed under this law by the
injured employee or his legal beneficiaries ,then
the association shall be subrogated to the rights
of the injured employee, insofar as may be neces-
sary, and may enforce, in the name of the injured
employee or of his legal beneficiaries or in its
own name and for the joint use and benefit of: said
employee or beneficiaries and the association; the
liability of said other person, and in base the
associatioa recover a sum greater than that paid
or assumed by the association to the employee-or
his legal beneficiaries, together with a reasona-
ble cost of enforcing such liability, which shall
be determined by the court trying the case, then
out of the sum so recovered the association shall
reimburse itself and pay said cost, and the excess
so recovered ahall be paid to the injured employee
or his beneficiaries. The association shall not ~
have the right to adjust or compromise such lia-
bility against such third person without notice to
the injured employee or his beneficiaries, and the
approval of the Board, upon a hearing thereof~.?’
The procedure contemplated by this statute is that
the employee has a choice of remedies. In the event such
employee proceeds against the association and receives ~,com-
pensa tioa , the cause of action remains alive. He may then
proceed against a third party based upon such third, party’s
liability irrespective of whether or not the association
chooses to exercise its right of subrogation. In ~the, ease
of Galveston, H, and S. A. Railwav Comoanv v. Wells, 15
S.Wrb6. 53. affirmed 121 Tex. m. 50 S . W. 2d I?4”f.i’~the
plaintiff alleged a cause of action for damages, it appear-
ing that the plaintiff had already received compensation
under the Workmen’s Compensation Act. The Court held:
“It is now well-settled law that, when an
employee’s representatives accept compensation
for death under the Workmen’s Compensation
Statute (Rev. St. 1925, arts. 8306-8309) , they
are not precluded from recovering against aeg-
ligeat third persons, though the compensation
Hon. Joe P. Gibbs, page 3, V-SO7
insurance company which carried the risk re-
fuses or ,fails. to prosecute such~sui
the’:r$ ~& ``b*~‘>tf++
&.k$$+ t,b; & a*rr,
the- riRBtW~Of=~tZle l%pres~entaltlvaa.. .Qf...
tha...aa-
ceased: emoLayee’- is “for ,the insurer!.a. henaflt
to the extent of sums advanced to such repre-
seatatives; and that any excess of any reeov-
ery had in such suit is to be for the benefit
of such representatives .“-’ ‘(Rmphas~is supplied)
Again, in Sbhaic&``,v., @orria~;“~24 S.W,.a491,~4?7 A :,
ITex’
.~ `` i ‘
Cfvi ADD. 1929.error ref.‘]. the Co~ui% in iateroret-
lag the rights of suirogatioh provided under Art; 8367,
Sec. 6a , declared:
“This ~,assignmeat is (tirectea at the cour$‘s
overruling appellant’s plea in abatement, and is .-
ba,sed on article 8307, Seo. 6a, R. S. We think
the assignment should be overruled. The Texas
Workmen’s Compensation Law, the provision of which
is invoked by appellant, evidently contemplates
that the injured employee is the real beneficiary
in cases where the damages suffered exceed, as’
they most always do, the amount received by the
employee from the indemaifying association. It
has been frequently held that in equity the real
beneficiary may always be permittea to sue for
the protection and enforcement of his right where
the party having the ‘mere legal title or right
fails or refuses to do so.. . .The statute invoked
does not destroy or abrogate appellee’s cause ef
action, and it is well settled that when the i$-
demnifying association fails to sue, es it aidhere,
the injured employee, or his beneficiary, may do so,
although compensation under the law may havs~bpen
claimed and.
..‘~Fb,“.rl.‘ received.
~:W``19 GalMst;on”
fT(br. .,c ‘v. $&@a,~ R; &s S. A. Rail-
;w~a,2d
.53.
wv’ appe rant says %he-right.
But of the indemnifying
association is absolute. Under the statute it
has an absolute right to institute suit, but such
right is not exclusive. The cause of action 14,
jointly owned by the injured employee or his ben-
eficiaries~,aad the insurance carrier. The right
of the insurer to be subrogated to the rights
of the injured employee is for the insurer’s
benefit to the extent only of the sums paid by
it to the injured employee or his benefi~iarles,
while the excess of any recovery had in euoh suit
against the negligent third party is for’the ben-
efit of the injured employee aad’his beaeficiar-
ies’. .The, statute exprwsaly ~provides~ that, where
Hon. Joe P. Gibbs) psge 4, V&SO7
the association brings the suit, it ‘shall not
have the right to adjust or compromise such
liability against such third person without
notice to the injured employee or his beaefici-
aries end the approval of the board, upon a
hearing thereof 0 ) This recognizes in and pre-
serves to the injured employee or his beaeficiar-
ies a continuing right to assert a claim for
damages against the negligent third person caus-
ing the injury, over end above the compensation
claimed end received from the insurance essocia-
tioa. . .n
Based upon the above authorities, it is clear
that the employeevs rights are not impaired by the action
or inaction of the association, but rather that the em-
ployee, though in receipt of his compensation, can sue in
his own name end recover amounts greater than that received
under the Workmen’s Compensation Law, regardless of the po-
sition of the association, Furthermore, the right of, sub-
rogation of the association is a property right that can
be waived or otherwise contracted away.
The case of Foster v. Langstoa, 170 S .W.a e56,
(Tex. Civ. App. 1943) held that:
“The right ‘o,f.,the Insurance Association to
subrogation or the right of the injured employee
to any excess recovery over against a third per-
son for injuring him, above the’ amount of compea-
satfen received by him, is ro ert
action and is subject to?&&&~i~&%%~ !n.”
(Emphasis supplied)
It follows that the “waiver of subrogation ea-
dorsemeatW under consideration here does not and could not
affect the rights of the employee. The only rights changed
are those existing between the association and the third
party. This right of subrogation is one that may be sold
or assigned 0 It is within the rights of the association to
waive it if it sees fit o The statutory language declaring
“the Association shall not have the right to adjust or
compromise such liability against such third party. . .”
does not invalidate such weiver beoause the employee may
proceed under the statutes exactly and with the same effect
as if there were no such waiver of subrogation endorsement.
Hon. Joe P. GibBs , pagb 11, V-807
The Board of Iqsurance Commissioners
may legally approvp a wqiver of subrogation
endorsement becausd the .rsnployee, under A*+
tide 0307, Sec. 6ij may rpaeive compensa-,
tion from the assobjati0n~Cnd still prooebd
against a third person foS'damag8.8,~ Galv
H. & S. A. Ry. Co. v. We + 13 s.k;2a48(
Civ. APP.), ami ed 121 x. q10, 50 s.
247. A waiver o?subrofiation by the asso-
ciation does not i$terfere with this right,
such waiver being 8 property right oi the
association that may be waived.
Ypurs ‘very truly
ATTORNBYGXRERAL OF TEXAS
Assistant
APPROVED:
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IBT ASSISTART
AlTORREX'.~L
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