. &ate of QJexae 

DAN MORALES 

ATTORNEY GESERAL. May 3, 1995 

Mr. Todd K. Brown Opinion No. DM-346 

Executive Director 

Texas Workers’ Compensation Commission 

4000 South M-35 

Austin, Texas 78704-7491 

Re: Whether article V, section 53 of 

the 1993 General Appropriations Act 

authorizes the Texas Workers’ Compensation Commission to obtain liability 

insurance for its employees and whether 

the purchase of director’s and officer’s 

liability insurance by a state agency as 

authorized by that provision constitutes a 

waiver of the state’s sovereign 

immunity (RQ-770) 

Dear Mr. Brown: 

You ask whether the Texas Workers’ Compensation Commission (the 

“commission”) is authorized to obtain liability insurance for its employees. The Texas 

Tort Claims Act, chapter 101 of the Civil Practice and Remedies Code, governs the tort 

‘; liability of state agencies and political subdivisions of the state. Section 101.027 of the 

Civil Practice and Remedies Code provides as follows: 

(a) Each governmental unit may purchase insurance policies 

protecting the unit and the unit’s employees’ against claims under 

this chapter. 

(b) The policies may relinquish to the insurer the right to 

investigate, defend, compromise, and settle any claim under this 

chapter to which the insurance coverage extends. 

‘The tern “employee” for purposes of the Texas Tort Claims Act means “a person, including an 

officer or agent, who is in the paid service of a governmental unit by competent authority.” Civ. Prac. & 

Rem. Code 5 101.001(l). Because the members of the Texas Workers’ Compensation Commission are 

entitled to reimbursement for actual necessary expenses and actual lost wages due to attendance at 

commission meetings, see Labor Code 5 402.011, they are “in the Paid service” of the department and are 

therefore “employees” for purposes of section 101.027 of the Civil Practice and Remedies Code. 
Mr. Todd K. Brown - Page 2 (DM-346) 

(c) This state or a political subdivision of the state may not 

require an employee to purchase liability insurance as a condition of 

employment if the state or the political subdivision is insured by a 

liability insurance policy. [Footnote added.] 

Article V, section 53 of the 1993 General Appropriations Act, Act of May 27, 1993, 73d 

Leg., R.S., ch. 1051, art. V, 5 53, 1993 Tex. Sess. Law Serv. 4463, 5363, provides in 

pertinent part as follows: 

Sec. 53. Tort Claims Act. None of the funds appropriated in this 

Act may be expended for the purpose of purchasing policies of 

insurance covering claims arising under the Texas Tort Claims Act. 

Notwithstanding the foregoing, state agencies may purchase 

director’s or officer’s liability insurance with appropriated funds for 

the agency’s appointed commission or board members and executive 

management staff* [Footnote added.] 

We understand that insurance companies have offered fbll coverage for all 

commission employees at no additional cost over the costs for coverage of the commission 

members3 and executive management. You ask, “if such additional coverage can be 

obtained at no additional costs to the state, is it permitted by the scope of Section 53.” 

Section 53 prohibits the use of appropriated fhnds for the purchase of liability 

insurance covering claims under the Texas Tort Claims Act and permits the use of 

appropriated funds for the purchase of director’s and officer’s liability insurance. That 

section 53 prohibits the use of appropriated kmds for the purchase of liability insurance 

covering claims arising under the Texas Tort Claims Act for employees does not by 

implication permit the department to obtain such insurance for its employees at no cost. 

We believe, however,‘that section 101.027 of the Civil Practice and Remedies Code 

authorizes the department to obtain such insurance. Subsection (a) of that provision 

authorizes the department to purchuse liability insurance. covering claims under the Texas 

Tort Claims Act for its employees. We see no reason why that authority would not 

include the authority to obtain such liability insurance for employees at no cost. We 

*We note that in the past, appropriations acts contained provisions similar to section 53 that 

included the first sentence of section 53 but not the second. This office repeatedly concluded that these 

provisions precluded state agencies from using appropriated funds to purchase any liability insurance 

under the Texas Tort Claims Act. See, e.g., Attorney General Opinions JM-889 (1988), Jh4-625 (1987), 

N-551 (1986), H-900 (1976), M-1215 (1972). The second sentence of section 53 first appeared in the 

1993 General Appropriations Act. See in& p. 5. 

3The commission members are appointed by the governor. See Labor Cede 8 402.001(a). 

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Mr. Todd K. Brown - Page 3 (DM-346) 

caution, however, that the determination whether such liability coverage is actually 

obtained for employees at no cost would involve the resolution of factual issues and is 

therefore beyond the purview of the opinion process. 

You also ask what level of management within the commission is insurable as 

“executive management staff’ as that term is used in section 53. Section 53 permits the 

purchase of “director’s or ofjcerh liability insurance with appropriated funds for the 

agency’s appointed commission or board members and executive management staff.” 

(Emphasis added.) The term “officer” in section 53 is taken from the private sector where 

the purchase of director’s and officer’s liability insurance is a common corporate practice. 

We do not believe it is used in its usual, narrow, public-sector sense, that is, a person upon 

whom the legislature has devolved a sovereign function of the government to be exercised 

by the officer for the benefit of the public largely independent of the control of others. See 

Aldine Indep. Sch. Dist. v. Standley, 280 S.W.2d 578, 583 (Tex. 1955). Rather, we 

believe that the term “officer,” when taken together with the term “executive management 

staff,” is intended to refer to those who would be considered executive officers of the 

department in the corporate sense, which is somewhat broader in scope. Cj Helm v. 

Mutual Serv. Casualty Ins. Co., 261 N.W.2d 598, 600 @inn. 1977) (using eases in the 

context of insurance policies covering private corporations by analogy to construe the 

term “executive officer” in general liability policy issued to municipality); see also influ 

note 4. 

The more recent cases we have found that discuss whether a particular person is an 

executive o&er of a corporation for purposes of liability insurance coverage consider 

such factors as the person’s connection with top officers of the corporation, the person’s 

authority outside of his or her department, whether the person has a large number of 

employees under his or her control, the person’s authority to hire and fire, the person’s 

authority to help shape corporate policy, and the person’s authority to make contracts on 

behalf of the corporation. See, e.g., Diamond Intern. Corp. v. Allstate Ins. Co., 712 F.2d 

1498, 1503 (1st Cir. 1983); Vega v. Southern ScrapMaterial Co., 517 F.2d 254, 258 (5th 

Cir. 1975); Industrial Indem. Co. v. Duwe, 707 P.2d 96, 100 (Or. App. 1985); Greene v. 

might, 365 So.2d 551, 558 (La. App. 1978). See generalZy Joseph B. Conder, who is 

An Executive Oficer of Insured Within Meaning of Liability Insurance Policy, 

1 A.L.R.Sth 139-40 (1992). Although we have not found any Texas cases construing the 

term “executive officer” in an insurance policy, we believe a Texas court would follow 

these more recent cases in construing the term, Moreover, we believe that these factors 

reflect the legislature’s intent in using the terms “officer” and “executive management 

stat?” together in section 53.4 

41n Helm v. Mutual Service Casuaity Insurance Co., 261 N.W.Zd 598, 601 (Minn. I977), tbe 

court limited the term “executive offker” in the context of a general liability policy issued to a 

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Mr. Todd K. Brown - Page 4 (DM-346) 

Section 402.063 of the Labor Code authorizes the commission to appoint an 

executive director who “is the executive officer and administrative head of the 

commission. The executive director exercises all rights, powers, and duties imposed or 

conferred by law on the commission, except [those] specifically reserved to 

members of the commission [and] serves at the pleasure of the commission.” Labor Code 

5 402.041; see also id. 5 402.004(b) (voting requirements for decisions regarding 

employment of executive director). The executive director conducts “the day-to-day 

operations of the commission in accordance with policies established by the commission 

and otherwise implement[s] commission policy.” Id. § 402.042(a). In addition, the 

executive director appoints division directors who serve at his or her pleasure. Id. 

§ 402.021. Thus, at the very minimum, the executive director is “executive management 

staff’ for purposes of director’s and officer’s liability insurance. Whether other positions 

are included in the term “executive management stat?” according to the factors described 

above involves issues of fact and must be determined on a case-by-case basis.s See &so 

mpra note 4. 

You also ask whether the purchase of director’s and officer’s liability insurance by 

a state agency as authorized by section 53 constitutes a waiver of the state’s sovereign 

immunity. The Texas Tort Claims Act provides for limited governmental liability, and 

waives sovereign immunity to suit to the extent of that liability. See Civ. Prac. & Rem. 

Code $3 101.021, .025. “To the extent an employee has individual immunity from a tort 

claim for damages,” it is not affected by the Texas Tort Claims Act. Id. 5 101.026. Paid 

board and commission members are “employees” for purposes of the Texas Tort Claims 

Act. See supra note 1. In essence, you ask whether section 53 constitutes a waiver of the 

state’s sovereign immunity to any greater extent than the waiver in the Texas Tort Claims 

Act. We believe it does not for the following reasons. 

(footnote continned) 

nnmicipahty to cover only those persons “whose position, power, and duties are established in the 

mnnicipal charter.” We decline to amstme the appropriations act provision to authorize the purchase of 

liability iasnrance. only for those department employees whose position, power, and duties are established 

pnrmant to state law. Most state agencies have only one or at most two positions set forth by statute. 

S&ion 53 uses the term “executive management statf.” Tbe use of the term srufl suggests that the 

legislature intended to authorize state agencies to purchase liability insnran cc for more than one or two 

positions. 

‘For example, section 402.021 of Labor Code reqnires the executive director to appoint “directors 

of the divisions of the wmmtssion” and provides mat they “serve at the pleasure of the executive 

director.” Altlwugb the directors listed in section 402.021 sre clearly at-will employees, we da not believe 

that their at-will status is d&positive in detemrining whether they are “executive management staff’ for 

purposes of the appropriations act provision. Rather, whether such employees are “executive management 

staff’ will depend upon the factors set forth above. 

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Mr. Todd K. Brown - Page 5 (DM-346) 

We believe that the second sentence of section 53 refers only to director’s and 

ofiicer’s liability insurance covering claims arising under the Texas Tort Claims Act. This 

language was offered as an amendment to the appropriations act by Representative 

Alexander on the House floor during second reading. See H.J. of Tex., 73d Leg., at 

1142-43 (1993). Representative Alexander did not explain the purpose of the amendment, 

and we are not aware of any other legislative history. Therefore, we construe the 

language on its face and in its statutory context. As noted above, section 101.027 of the 

Texas Tort Claims Act provides that each governmental unit may purchase insurance 

policies protecting its employees, including its officers and directors, against claims under 

the act. For many years, section 53 and its counterparts in previous appropriations acts, 

see mpm note 2, effectively prohibited state agencies from doing so, at least with 

appropriated funds.6 The newly added second sentence of section 53 appears to have 

been intended to eliminate this obstacle with respect to director’s and officer’s liability 

insurance. It does not appear to be intended to authorize state agencies to obtain 

insurance to cover suits against directors and officers arising under the common law or 

statutes other than the Texas Tort Claims Act. 

Were we to conclude otherwise, the second sentence of section 53 could run afoul 

of the Texas Constitution, Article III, section 35 of the Texas Constitution prohibits the 

enactment of general legislation in a general appropriations bill. See Moore v. Sheppard, 

192 S.W.2d 559, 561 (Tex. 1946); Attorney General Opinions DM-93 (1992), DM-81 

(1992), JIvI-1151 (1990) MW-389 (1981), MW-51 (1979), V-1254 (1951) V-1253 

(1951). A rider to a general appropriations bill may do no more than “detail, limit, or 

restrict the use of the [appropriated] funds or otherwise insure that the money is spent for 

the required activity for which it is therein appropriated.” Attorney General Opinion 

V-1254 (1951) at 17 (quoting summary). 

Specific statutory authority is necessary to authorize state agencies to purchase 

liability insurance.7 Attorney General Opinions TM-625 (1987), H-1318 (1978). The 

second sentence of section 53 would be constitutionally intirm if it were construed to 

authorize state agencies to obtain insurance to cover suits against directors and officers 

arising under the common law or statutes other than the Texas Tort Claims Act, to the 

extent such authority does not exist under general law. Although we realize there is some 

question as to the utility of director’s and officer’s insurance for claims arising under the 

%ee Attorney General Opinions JM-889 (1988), JM&25 (1987), JM-551 (1986), H-900 (1976), 

M-1215 (1972). 

7For statutes authorizing state agencies to purchase liability insurance, see Civil practice and 

Remedies Coda section 101.027 and Government Code section 612.002. 

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Mr. Todd K. Brown - Page 6 (DM-346) 

Texas Tort Claims Act,s we cannot conclude that the legislature intended impermissibly to 

enact general law authorizing the purchase of broader insurance coverage in the 

appropriations act See Gov’t Code 5 3 11.021(l) (it is presumed that in enacting a statute 

the legislature intended compliance with the constitution). We also note that if the second 

sentence of section 53 were construed to authorize state agencies to purchase director’s 

and officer’s insurance for claims arising under other statutes and the common law, we 

would have to careMy consider whether such coverage would run afoul of article III, 

section 51 of the Texas Constitution. See Tex. Const. art. III, $ 51 (legislature shall have 

no power to make any grant or authorize the making of any grant of public moneys to any 

individual); Attorney General Opinion H-70 (1973) at 5-6 (where there is no risk of 

governmental liability, to provide insurance fimds to discharge the liability of an individual 

school district trustee would be a grant of public money or aid of an individual in violation 

of article III, sections S 1 and 52 of the Texas Constitution). 

For the foregoing reasons, we conclude that the second sentence of section 53 

authorizes state agencies to purchase director’s and officer’s liability only for claims 

arising under the Texas Tort Claims Act. Therefore, we also conclude that the second 

sentence of section 53 does not waive sovereign immunity to any greater extent than it is 

waived by the Texas Tort Claims Act. 

*As noted above, the Texas Tort Claims Act does not waive individual immunity. See Civ. Prac. 

& Rem. Code 5 101.026. A suit against a state employee or member of a state goveming body in his or 

her personal capacity would not arise under the Texas Tort Claims Act. In addition, a state employee or 

member of a state governing body is entitled to indemnitieation in suits arising out of a bread range of 

official conduct. See id. ch. 104. If we are correct that the second sentence of section 53 refers only to 

director’s and officer’s liability insurance covering claims arising under the Texas Tort Claims Act, then 

it is difficult to imagine what sort of claims such insnrance would cover. 

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Mr. Todd K. Brown - Page 7 (DM-346) 

SUMMARY 

Section 101.027 of the Civil Practice and Remedies Code 

authorizes the Texas Workers’ Compensation Commission (the 

“commission”) to obtain liability insurance against claims under the 

Texas Tort Claims Act for employees. Section 53 of article V of the 

1993 General Appropriations Act precludes the commission from 

using any appropriated fimds for the purchase of such insurance. 

Together these provisions authorize the commission to obtain liability 

insurance against claims under the Texas Tort Claims Act for 

employees at no cost. The determination whether liability coverage 

is actually obtained for employees at no cost would involve the 

resolution of factual issues. 

The terms “officer” and “executive management staff’ in section 

53 refer to those persons who could be considered executive officers 

of the commission as that term is used in the private, corporate 

sector. The executive director of the department is “executive 

management staff’ for purposes of director’s and officer’s liability 

insurance. Whether other positions are included in the term 

“executive management staff’ must be determined on a case-by-case 

basis. 

The second sentence of section 53, article V of the 1993 General 

Appropriations Act does not waive the state’s sovereign immunity to 

any greater extent than it is waived by the Texas Tort Claims Act. 

DAN MORALES 

Attorney General of Texas 

JORGE VEGA 

First Assistant Attorney Genera) 

SARAH J. SHIRLEY 

Chair, Opinion Committee 

Prepared by Mary R. Crouter 

Assistant Attorney General 

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