Texas Supreme Court Gives TAN and Nonsubscribers Win in East Medical Center Athens Case

On April 25, the Texas Supreme Court (SCOTX) issued its opinion in the East Texas Medical case, delivering a big win for Texas nonsubscribers. Tracking the arguments advanced by TAN and other amici in their amici brief filed on Jan. 2, SCOTX concluded that a nonsubscriber action for personal-injury damages is not an action for benefits under the Texas Workers’ Compensation Act (TWCA) and therefore is now excluded from Texas’s Proportionate Responsibility Statute. While a nonsubscriber cannot avail itself of any proportionate responsibility of the employee under that statute because “Section 406.033(a) [of the Labor Code] waives a nonsubscriber’s defenses that are based on—and thus prohibits proportionate responsibility that is based on—its employee’s knowledge and negligence,” it is not clear that that prohibition does not extend to excluding the responsibility of third parties. Accordingly, the SCOTX held that a nonsubscribing employer is permitted to designate a responsible third party and have the jury apportion fault between it and the employer.

While the East Texas Medical decision dealt specifically with the responsible-third-party issue, it has far-reaching implications that will be further beneficial to a nonsubscribing employer. Now that the SCOTX has held that a nonsubscriber action is not excluded from the Texas Proportionate Responsibility Statute, that means a nonsubscriber may also take advantage of other features of that statute, such as the section allowing settlement credits. Now, when an employee settles with a co-defendant or a third party, the nonsubscriber will receive a dollar-for-dollar setoff against any award or judgment against it. Also, the East Texas Medical decision provides further authority for nonsubscribers to remove cases to federal court and fight a remand. The removal statute prohibits removal of cases “under the workmen’s compensation laws,” and several federal judges have recently held that a nonsubscriber case “arises under” the Texas Workers’ Compensation Act, and therefore remanded removed cases back to state court. Because the Texas Supreme Court just decreed that a nonsubscriber case is not a statutory action under the TWCA but rather a common law tort, this should help nonsubscribers fight motions to remand based on the “arises under” argument.

The East Texas Medical case is a huge win for nonsubscribers. The amicus effort was a huge part of the win since the amici were the only ones to argue the nonsubscriber angle. The impact of the amicus brief was significant, as there are several places in the court’s opinion where the court all but cut and pasted arguments from the amici brief.

Special thanks to the companies that supported TAN’s amicus effort and to Donna Peavler and the team at Peavler Briscoe for their outstanding work on the brief.

Below is a short summary from SCOTX on their ruling.

In re E. Tex. Med. Ctr. Athens, ___ S.W.3d ___, 2025 WL ___ (Tex. Apr. 25, 2025) [23-1039]

This case concerns whether an employer that opted not to subscribe to the Texas workers’ compensation program may designate responsible third parties when its employee sues it for negligence.

East Texas Medical Center Athens employed Sharon Dunn as an emergency-room nurse. Dunn alleges she was injured by an EMT who was not employed by ETMC Athens during one of her shifts. She originally sued the EMT and his employer, but they were dismissed from the case. Dunn then added claims against ETMC Athens, which moved to designate the EMT and his employer as responsible third parties. After the trial court granted the motion, Dunn moved to strike the designations, arguing that the proportionate-responsibility statute, which prohibits third-party designations in “action[s] to collect workers’ compensation benefits under” the Workers’ Compensation Act, does not apply because her suit is an action to collect “benefits.”

The trial court granted the motion. The court of appeals denied ETMC Athens’s petition for mandamus relief, and ETMC Athens petitioned for mandamus relief in the Supreme Court.

The Court conditionally granted mandamus relief and held that an employee’s negligence suit against her nonsubscribing employer is not one to “collect workers’ compensation benefits” under the Act. Thus, the proportionate responsibility statute applies to such an action. The Court further held that the Act itself does not prohibit responsible third-party designations and that there was sufficient evidence in the record to create a fact issue regarding the third parties’ responsibility in this case. Therefore, the trial court’s striking of ETMC Athens’s designations was an abuse of discretion with no adequate appellate remedy, warranting mandamus relief.