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Digital EditionTexas Supreme Court Rules Nonsubscribing Employers Can Designate Responsible Third Parties
In a decision affecting liability allocation in Texas workplace injury cases, the Supreme Court of Texas has ruled that employers that opt out of the state’s workers’ compensation system can still designate responsible third parties when facing negligence claims from injured employees.
The court’s April 2025 ruling in In Re: East Texas Medical Center Athens establishes important precedent for nonsubscribing companies — employers that choose alternative benefit plans or other forms of insurance to cover workplace injuries — and has substantial implications for how liability insurance responds to workplace injury claims outside the workers’ compensation system.
The case originated when Sharon Dunn, an emergency department nurse at East Texas Medical Center Athens (ETMC Athens), sustained a serious back injury after allegedly being struck by a stretcher pushed by an emergency medical technician (EMT) who was not employed by the hospital.
Dunn initially sued the EMT and his employer, but those claims were dismissed when she failed to timely serve an expert report required under the Texas Medical Liability Act. She then amended her pleadings to assert negligence claims against ETMC Athens, which had elected not to subscribe to the Texas workers’ compensation program.
ETMC Athens sought to designate the EMT and his employer as responsible third parties under Texas’s proportionate-responsibility statute, which would potentially reduce the hospital’s liability for Dunn’s injury by allocating fault among all responsible parties. When the trial court initially granted this designation without objection from Dunn, the case proceeded for 11 months.
Dunn then moved to strike the designations of responsible parties, arguing that the proportionate-responsibility statute did not apply because her suit constituted “an action to collect workers’ compensation benefits” under the Workers’ Compensation Act, which would be exempt from the statute. The trial court granted Dunn’s motion.
The Texas Supreme Court disagreed with the lower courts’ interpretation, distinguishing between actual workers’ compensation claims and negligence suits against nonsubscribing employers.
Justice Jeffrey S. Boyd, delivering the court’s opinion, explained: “A negligence claim against a nonsubscribing employer is a common-law negligence claim, not an action to collect workers’ compensation benefits under the Act.” The court reasoned that workers’ compensation benefits are fixed by statute and paid without regard to fault, while negligence claims against nonsubscribers require proof of the employer’s negligence and damages are determined by common law.
The state Supreme Court further clarified that while the Workers’ Compensation Act prohibits nonsubscribing employers from raising certain defenses (contributory negligence, assumption of risk, and fellow-employee negligence), this prohibition does not extend to designating responsible third parties. The court found that allocating responsibility to third parties does not constitute an impermissible “defense” under the Act.
The Supreme Court conditionally granted mandamus relief, ordering the trial court to vacate its order striking the responsible third party designations. The court concluded that ETMC Athens lacked an adequate remedy by appeal because the improper striking of the designations would “skew the proceedings, potentially affect the outcome of the litigation, and compromise the presentation of the relator’s defense.”
This ruling provides important clarity for insurance carriers covering nonsubscribing employers in Texas, confirming that their insureds maintain the right to designate responsible third parties in workplace injury litigation, potentially reducing their proportionate share of liability when multiple parties contribute to an employee’s injury.
Read the full decision here. &
