75R11934 DLF-D
By Brimer H.B. No. 2630
Substitute the following for H.B. No. 2630:
By Brimer C.S.H.B. No. 2630
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to insurance coverage, including workers' compensation
1-3 insurance coverage, for certain owners and contractors.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subchapter B, Chapter 5, Insurance Code, is
1-6 amended by adding Article 5.17 to read as follows:
1-7 Art. 5.17. CONTRACTOR'S OR SUBCONTRACTOR'S GENERAL LIABILITY
1-8 OR WORKERS' COMPENSATION POLICY; CERTAIN COVERAGE PROHIBITED.
1-9 (a) In this article:
1-10 (1) "General contractor" means a person who:
1-11 (A) under contract with a project owner,
1-12 performs work or arranges for work to be performed; and
1-13 (B) is not controlled by the project owner and
1-14 is not subject to the project owner's right of control with respect
1-15 to the performance of the work.
1-16 (2) "Owners and contractors protective liability
1-17 insurance" is insurance that provides coverage for the named
1-18 insured's liability arising out of:
1-19 (A) operations performed for the named insured
1-20 by an identified general contractor or subcontractor in connection
1-21 with an identified project; or
1-22 (B) the named insured's acts or omissions in
1-23 connection with the named insured's general supervision of the
1-24 general contractor's or subcontractor's work.
2-1 (3) "Project owner" means a person who, directly or
2-2 through an agent, contracts with a general contractor.
2-3 (4) "Subcontractor" means a person who furnishes labor
2-4 to fulfill an obligation to a general contractor or to another
2-5 subcontractor to perform all or part of the work required by the
2-6 contract between the project owner and the general contractor.
2-7 (b) A general liability or workers' compensation insurance
2-8 policy issued to a subcontractor may not, through endorsement or
2-9 otherwise, provide coverage for a project owner or general
2-10 contractor for liability for damages arising from, or workers'
2-11 compensation benefits for, personal injury, death, or damage to the
2-12 property of others arising from the project that is the subject of
2-13 the contract if liability coverage providing substantially similar
2-14 protection is available to the project owner or general contractor
2-15 through an owners and contractors protective liability insurance
2-16 policy.
2-17 (c) A general liability or workers' compensation insurance
2-18 policy issued to a general contractor may not, through endorsement
2-19 or otherwise, provide coverage for a project owner or subcontractor
2-20 for liability for damages arising from, or workers' compensation
2-21 benefits for, personal injury, death, or damage to the property of
2-22 others arising from the project that is the subject of the contract
2-23 if liability coverage providing substantially similar protection is
2-24 available to the project owner or subcontractor through an owners
2-25 and contractors protective liability insurance policy.
2-26 (d) The commissioner may adopt rules as necessary to
2-27 implement this article.
3-1 SECTION 2. Chapter 406, Labor Code, is amended by adding
3-2 Subchapter I to read as follows:
3-3 SUBCHAPTER I. COVERAGE OF CERTAIN OWNERS, CONTRACTORS,
3-4 AND THEIR EMPLOYEES
3-5 Sec. 406.181. DEFINITIONS. (a) In this subchapter:
3-6 (1) "Contractor" means a person who contracts to
3-7 perform work for another. The term includes a general contractor,
3-8 subcontractor, or independent contractor.
3-9 (2) "Principal" means a person who:
3-10 (A) undertakes work for himself or herself or
3-11 contracts to perform work for another; and
3-12 (B) enters into an agreement with a contractor
3-13 for execution by or under the contractor of all or any part of the
3-14 work.
3-15 (3) "Worker" means an individual who performs work for
3-16 a principal, but who is not a direct employee of the principal.
3-17 The term includes a contractor who is an individual.
3-18 (b) For purposes of this subchapter:
3-19 (1) a principal may include an owner or lessor of real
3-20 property; and
3-21 (2) a worker may have more than one principal for the
3-22 same work.
3-23 Sec. 406.182. ELECTION BY PRINCIPAL TO OBTAIN COVERAGE.
3-24 (a) Subject to Article 5.17, Insurance Code, a principal may elect
3-25 to obtain workers' compensation insurance coverage for a contractor
3-26 or a worker employed by a contractor for the period during which
3-27 the contractor or worker performs the work of the principal.
4-1 (b) A principal must make the election:
4-2 (1) in a written agreement with the contractor; or
4-3 (2) by a written notice filed with the commission.
4-4 (c) A principal may obtain workers' compensation insurance
4-5 coverage in the manner authorized under Section 406.003 or by
4-6 entering into a written agreement with another person under which
4-7 the other person obtains the coverage. Notwithstanding Section
4-8 415.006, if the contractor agrees in writing, the principal may
4-9 deduct all or part of the principal's cost of the coverage from the
4-10 contract price or other amount owed to the contractor by the
4-11 principal.
4-12 (d) If coverage is provided through an insurance company,
4-13 the principal and contractor shall provide to their respective
4-14 workers' compensation insurance companies written notice of an
4-15 agreement entered into under this section. If either the principal
4-16 or contractor has agreed to provide workers' compensation coverage
4-17 through self-insurance as provided by this subtitle, written notice
4-18 of the agreement shall be given to the commission not later than
4-19 the 10th day after the date the agreement is executed.
4-20 Sec. 406.183. PRINCIPAL'S LIABILITY. (a) If a principal
4-21 has elected to obtain workers' compensation insurance coverage for
4-22 a worker under Section 406.182, the principal's insurance carrier
4-23 for the coverage is liable for workers' compensation benefits if
4-24 the worker sustains a compensable injury in the course and scope of
4-25 the work performed by the worker for the principal.
4-26 (b) If the principal has elected to obtain coverage by
4-27 agreeing that another person will obtain the coverage, the
5-1 principal's insurance carrier is liable for benefits only to the
5-2 extent the other person or the other person's insurance carrier
5-3 fails to pay benefits to which the worker is entitled.
5-4 Sec. 406.184. PRINCIPAL'S AND CONTRACTOR'S IMMUNITY. (a)
5-5 Except as provided by Section 408.001(b), a recovery of workers'
5-6 compensation benefits under this subchapter is the exclusive remedy
5-7 of a worker or a worker's legal beneficiary against a principal who
5-8 elects to obtain workers' compensation coverage and the principal's
5-9 employee for the death of or a work-related injury sustained by the
5-10 worker.
5-11 (b) Except as provided by Section 408.001(b), a recovery of
5-12 workers' compensation benefits under this subtitle is the exclusive
5-13 remedy of an employee of a principal who elects to obtain workers'
5-14 compensation coverage or the employee's legal beneficiary against a
5-15 contractor or a contractor's employee for the death of or a
5-16 work-related injury sustained by the employee.
5-17 (c) This subchapter does not affect a direct employer's
5-18 status and immunity under Section 408.001 as an employer against
5-19 whom the recovery of workers' compensation benefits is the injured
5-20 employee's exclusive remedy.
5-21 SECTION 3. Section 415.006(a), Labor Code, is amended to
5-22 read as follows:
5-23 (a) An employer may not collect from an employee, directly
5-24 or indirectly, a premium or other fee paid by the employer to
5-25 obtain workers' compensation insurance coverage, except as provided
5-26 by Sections 406.123, [and] 406.144, and 406.182.
5-27 SECTION 4. The change in law made by Section 1 of this Act
6-1 applies only to an insurance policy that is delivered, issued for
6-2 delivery, or renewed on or after January 1, 1998. A policy that is
6-3 delivered, issued for delivery, or renewed before January 1, 1998,
6-4 is governed by the law as it existed immediately before the
6-5 effective date of this Act, and that law is continued in effect for
6-6 that purpose.
6-7 SECTION 5. Title 5, Labor Code, as amended by this Act,
6-8 applies only to a cause of action that accrues on or after the
6-9 effective date of this Act. A cause of action that accrues before
6-10 that date is governed by the law in effect on the date that the
6-11 cause of action accrued, and the former law is continued in effect
6-12 for that purpose.
6-13 SECTION 6. This Act takes effect September 1, 1997.
6-14 SECTION 7. The importance of this legislation and the
6-15 crowded condition of the calendars in both houses create an
6-16 emergency and an imperative public necessity that the
6-17 constitutional rule requiring bills to be read on three several
6-18 days in each house be suspended, and this rule is hereby suspended.