After the BP Spill, Will Texas Tighten Liability Laws?

Nelson Roach, past president of the TTLA.
Nelson Roach, past president of the TTLA.

Nelson Roach, a Baylor graduate who served last year as the president of the Texas Trial Lawyers Association, has been practicing with his Daingerfield-based firm, Nix, Patterson and Roach, since 1987. Over that time, he has watched Texas's tort system come under fire from both the Legislature and the courts — to the point, he believes, where Texas-style tort reform has ended up coddling large, misbehaving companies at the expense of ordinary workers.

Roach will present his concerns at a hearing today of the House Business and Industry and the Judiciary and Civil Jurisprudence committees. Representatives of business groups, which prefer minimal liability, also will testify, as will some labor and environmental groups. The hearing will address a variety of issues, given that the workers' compensation division of the Texas Department of Insurance is undergoing the sunset review process in the next legislature. But chief among the issues will be a 2007 Texas Supreme Court case.

In Entergy Gulf States v. John Summers, the court ruled that plant owners can shield themselves from lawsuits by injured contract workers by purchasing workers' compensation insurance, which pays workers a portion of their wages as well as medical bills in the event of injury. Contractors — the companies that actually employ the workers — are already able to shield themselves in this way; what was new was the extension of this right to companies that own the workplace. (Ownership can be difficult to parse: To take a current example, in the Deepwater Horizon situation, Transocean owned the rig, but employees of BP, Halliburton and other companies also worked on the rig.)

The Entergy ruling startled many Texas officials and stirred anger among some lawmakers, who argued the legislative intent was ignored. But so far, efforts to change the law to get around the ruling have fallen short — the Texas Supreme Court reaffirmed its ruling last year — though another try is expected in the coming session.

Texans for Lawsuit Reform, the masterminds of the state's tort reform efforts, declined to comment for this story.* But Roche granted the Tribune an interivew about both the case and its continuing ramifications in the wake of the Gulf oil spill (which occurred in federal waters but has nonetheless stirred interest in Texas).

Hear a clip of Roach's interview here, followed by a more extended transcript.

TT: It seems like the big question is the relevance of the Entergy case to potential BP-like situations if they happened in Texas waters.

Roach: I think that this issue of third-party liability ... will be a major example of where tort reform — so-called tort reform — has gone from being an issue of restoring fairness and personal responsibility to the tort system [to] crossing the threshold to providing immunity or partial immunity to companies that admittedly have done something very wrong and hurt someone very bad.

TT: So how would that play out now, and how could that change?

Roach: What we had with the Entergy decision — what the Legislature did when the statute was initially revised was to make sure that contract employees who came in to do maintenance work, employees who came into do maintenance work or to do construction work at these major premises — steel plants refineries, places like that — was a deterrent factor that was built in. Because those people come into a plant, and they have to trust the companies that they contract with, that the situation is safe for their workers. What we saw in the BP explosion [in Texas City] in 2005 was a situation in which BP treated the contract employees, treated everyone, maybe even their own employees, not very safely, but especially the contract employees. For example, they made a clear choice not to blast-proof houses in the areas where those people were working to save a little bit of money. You know, the bottom line of it is, when no one is accountable, no one's safe. This is an issue about accountability and responsibility versus immunity for bad actors, and BP is probably the worst of the bad actors. There are other people who either on an episodic basis or on a more chronic basis — other companies — that are not totally safe for their workers or contractors. But BP is obviously the worst of the bunch.

TT: So what would have happened if the BP spill had happened in Texas waters? If I'm reading the Entergy case right, if Transocean had bought workers' comp [insurance], then they would essentially be out of the liability question?

Roach: For workers [who] died, they would still be potentially on the hook for punitive damages only. For workers [who] were injured, no matter how badly they were injured, the sole remedy would be workers' comp — 400 weeks, 401 weeks of comp, which I think is about two-thirds of an average weekly wage of a wage earner, which is not very much. Certainly not enough to compensate. Most of these people are young men with families. You know, certainly not enough to compensate those families for the loss of their husband or the bread-winner of the family.

TT: What happens in other states?

Roach: Third-party liability issue is all over the board among the different states. It's kind of a patchwork as to who provides this immunity option and who does not.

TT: What would happen in federal waters? I guess the BP accident did take place in federal waters.

Roach: Under the Death on the High Seas Act [a 1920 federal law], the only remedy is economic damages. And if you recall, a bill was filed in the [U.S.] House — I think it's gotten out of committee — to essentially allow all the available damages under the Death on the High Seas Act for one of these rig accidents. Most [maritime law] was created around the turn of the 20th century, and it's pretty archaic. And I think that this incident has spurred — well, I know this incident has spurred Congress to finally address this issue. And so it's a problem on the high seas, and it's a problem in Texas. ...

The debate is no longer about bringing fairness to the system. The debate is about how much about how much immunity to give to admitted wrongdoers. ... [D]eterrence is dead, accountability is dead, and wrongdoers like BP are enjoying immunity for careless and wrongful conduct. The net result of that is that we are socializing responsibility for careless conduct by a few companies.

So the question is ... why should a company that does the right thing and takes appropriate precautions to protect their employees have to subsidize BP and other companies like BP that are careless and hurt people?

TT: How are they subsidizing? And how is this socialized?

Roach: Because workers' comp rates are applied by industry. And so if BP goes out and kills 15 workers and injures 150 in a refinery explosion, that affects the actuarial rates that the insurance companies come up with for their workers' comp rates. And those workers' comp rates are then applied across the board to other companies that are in the same type of industry. So what happens is the responsible companies subsidize the irresponsible companies in terms of their workers being injured.

TT: Can you tell me a little bit about legislative efforts to remedy this situation?

Roach: Well in the last session, there was a bill that was filed by Helen Giddings to specifically address this issue. And it was passed out of the House, which, you know, is a Republican-majority House, and sent over to Senate. But in order to come to floor of Senate you need 21 votes, and we could only get up to 20 votes, so we never could get it to come to the floor.

TT: Is it going to be reintroduced this session, and will it be different?

Roach: Yes, it's going to be reintroduced. There's going to be a fight about [it] because workers' comp is up for Sunset review this next session. And so ... there's going to be a broader question about third-party liability, period. And there's going to be a question about these catastrophic injuries in the comp system. My belief and my argument has always been that there should be an option for workers to opt out of comp system in event of catastrophic injury, because of this issue of accountability and responsibility and public justice. One of the reasons why these companies like comp, they like no-fault, they like arbitration, is they want to keep an evaluation of their bad conduct out of the public eye. For example, with the BP explosion, if we had not had the opportunity of public justice, we would never have uncovered just how horrible BP's safety record and safety decisions were at that plant before the explosion, because they would have been able to basically keep it shoved up under the rug. [T]here wouldn't have been any court to conduct discovery, and it wouldn't have been public, and we'd have never known about it.

And yet despite what was uncovered in that accident, and despite the fact that BP promised — publicly promised — that they would make changes to operate their company in a safe, manner, five years later we have the worst oil spill and industrial accident in the history of the Gulf. And if you look at the news reports about what happened, it's pretty clear that there was a multitude of very careless and bad decisions that were made.

 

*2:13pm: Editor's note: An earlier version of this story said that Texans for Lawsuit Reform "did not return a call for comment about the Entergy case and the trial bar's attack on it." The wording has been changed to reflect that TLR declined to comment for the story.

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