TEIEATCORNEYGENERAI. 

OFTEXAS 

Hon. Joe P. Gibbs 

Casualty Insurance Commissioaer 

Board of Insurance Commissioners 

Austin, Texas 

Opinion NO. V-807 

Re: Legality of a waiver of 

Subrogation Endorsement” 

.uaaer Art. 0307, Sec. 6a, 

Revised Civil Statutes 

of Texas 

Dear Commissioner Gibbs: 

Your request for an opinion is in part as 

follows: 

“This Department has reoeived several 

requests for approval of the following or a 

similar endorsement to be attached to Workmen’s Compensation policies: 

“‘It is understood and agreed that 

the company hereby waives the right 

of subrogation under the policy to 

which this endorsement is attached I 

against the 1 

. 

Name of Employer 

“In view of the section of the’ Worknea~s 

Compensation statute quoted above, can the 

Board of Insurance Commissioners legally approve a ‘Waiver of Subrogation Endorsement 

for attachment ~to Texas Standard Workmen’s 

Compensation policies?” 

Your request indicates that you are concerned 

solely with the legality of the above endorsement as tested by Article 8307, Sec. 6a, V.C.S. This opinion, therefore deals only with that question. 

Art.iele-8307, Sec. .6a, V.C.S., ,~ provides: 

“Where the injury for which compensation is 

payable under this law was caused under circum- 
Hon. Joe P. Gibbs, Page 2, V-807 

stances creating a legal liability in some person 

other than the subscriber to pay damages in respect thereof, the employee may at his option 

proceed either at law against that person to recover damages or against the association for compensation under this law, but not against both, 

and if he elects to proceed at law against the 

person other than the subscriber, then he shall 

not be entitled to compensation under this law. 

If compensation be claimed under this law by the 

injured employee or his legal beneficiaries ,then 

the association shall be subrogated to the rights 

of the injured employee, insofar as may be necessary, and may enforce, in the name of the injured 

employee or of his legal beneficiaries or in its 

own name and for the joint use and benefit of: said 

employee or beneficiaries and the association; the 

liability of said other person, and in base the 

associatioa recover a sum greater than that paid 

or assumed by the association to the employee-or 

his legal beneficiaries, together with a reasonable cost of enforcing such liability, which shall 

be determined by the court trying the case, then 

out of the sum so recovered the association shall 

reimburse itself and pay said cost, and the excess 

so recovered ahall be paid to the injured employee 

or his beneficiaries. The association shall not ~ 

have the right to adjust or compromise such liability against such third person without notice to 

the injured employee or his beneficiaries, and the 

approval of the Board, upon a hearing thereof~.?’ 

The procedure contemplated by this statute is that 

the employee has a choice of remedies. In the event such 

employee proceeds against the association and receives ~,compensa tioa , the cause of action remains alive. He may then 

proceed against a third party based upon such third, party’s 

liability irrespective of whether or not the association 

chooses to exercise its right of subrogation. In ~the, ease 

of Galveston, H, and S. A. Railwav Comoanv v. Wells, 15 

S.Wrb6. 53. affirmed 121 Tex. m. 50 S . W . 2d I? 4”f.i’ ~the 

plaintiff alleged a cause of action for damages, it appearing that the plaintiff had already received compensation 

under the Workmen’s Compensation Act. The Court held: 

“It is now well-settled law that, when an 

employee’s representatives accept compensation 

for death under the Workmen’s Compensation 

Statute (Rev. St. 1925, arts. 8306-8309) , they 

are not precluded from recovering against aegligeat third persons, though the compensation 
Hon. Joe P. Gibbs, page 3, V-SO7 

insurance company which carried the risk refuses or ,fails. to prosecute such~sui the’:r$ ~& ~~b*~‘>tf++ &.k$$+ t,b; & a*rr, 

the- riRBtW~Of=~tZle l%pres~entaltlvaa.. .Qf... tha...aaceased: emoLayee’- is “for ,the insurer!.a. henaflt 

to the extent of sums advanced to such represeatatives; and that any excess of any reeovery had in such suit is to be for the benefit 

of such representatives .“-’ ‘(Rmphas~is supplied) 

Again, in Sbhaic&~~,v., @orria~;“~24 S.W,.a491,~4?7 A :, 

ITex’i ‘Cfvi ADD. 1929.error ref.‘]. the Co~ui% in iateroret- .~ ~~ 

lag the rights of suirogatioh provided under Art; 8367, 

Sec. 6a , declared: 

“This ~,assignmeat is (tirectea at the cour$‘s 

overruling appellant’s plea in abatement, and is .- 

ba,sed on article 8307, Seo. 6a, R. S. We think 

the assignment should be overruled. The Texas 

Workmen’s Compensation Law, the provision of which 

is invoked by appellant, evidently contemplates 

that the injured employee is the real beneficiary 

in cases where the damages suffered exceed, as’ 

they most always do, the amount received by the 

employee from the indemaifying association. It 

has been frequently held that in equity the real 

beneficiary may always be permittea to sue for 

the protection and enforcement of his right where 

the party having the ‘mere legal title or right 

fails or refuses to do so.. . .The statute invoked 

does not destroy or abrogate appellee’s cause ef 

action, and it is well settled that when the i$- 

demnifying association fails to sue, es it aidhere, 

the injured employee, or his beneficiary, may do so, 

although compensation under the law may havs~bpen 

claimed and. received. GalMst;on”R; & S. A. Rail- 

..‘~Fb,“.rl.‘~:W~~19 fT(br. .,c ‘v. $&@a,~ 

wv’ 

s ;w~a,2d .53. 

But appe rant says %he-right. of the indemnifying 

association is absolute. Under the statute it 

has an absolute right to institute suit, but such 

right is not exclusive. The cause of action 14, 

jointly owned by the injured employee or his beneficiaries~,aad the insurance carrier. The right 

of the insurer to be subrogated to the rights 

of the injured employee is for the insurer’s 

benefit to the extent only of the sums paid by 

it to the injured employee or his benefi~iarles, 

while the excess of any recovery had in euoh suit 

against the negligent third party is for’the benefit of the injured employee aad’his beaeficiaries’. .The, statute exprwsaly ~provides~ that, where 
Hon. Joe P. Gibbs) psge 4, V&SO7 

the association brings the suit, it ‘shall not 

have the right to adjust or compromise such 

liability against such third person without 

notice to the injured employee or his beaeficiaries end the approval of the board, upon a 

hearing thereof 0 ) This recognizes in and preserves to the injured employee or his beaeficiaries a continuing right to assert a claim for 

damages against the negligent third person causing the injury, over end above the compensation 

claimed end received from the insurance essociatioa. . .n 

that 

Based upon the above authorities, it is clear 

the employeevs rights are not impaired by the action 

or inaction of the association, but rather that the employee, though in receipt of his compensation, can sue in 

his own name end recover amounts greater than that received 

under the Workmen’s Compensation Law, regardless of the position of the association, Furthermore, the right of, subrogation of the association is a property right that can 

be waived or otherwise contracted away. 

The case of Foster v. Langstoa, 170 S .W.a e56, 

(Tex. Civ. App. 1943) held that: 

“The right ‘o,f.,the Insurance Association to 

subrogation or the right of the injured employee 

to any excess recovery over against a third person for injuring him, above the’ amount of compeasatfen received by him, is ro ert 

action and is subject to?&&&~i~&%%~ !n.” 

(Emphasis supplied) 

It follows that the “waiver of subrogation eadorsemeatW under consideration here does not and could not 

affect the rights of the employee. The only rights changed 

are those existing between the association and the third 

party. This right of subrogation is one that may be sold 

or assigned 0 It is within the rights of the association to 

waive it if it sees fit o The statutory language declaring 

“the Association shall not have the right to adjust or 

compromise such liability against such third party. . .” 

does not invalidate such weiver beoause the employee may 

proceed under the statutes exactly and with the same effect 

as if there were no such waiver of subrogation endorsement. 
Hon. Joe P. GibBs , pagb 11, V-807 

The Board of Iqsurance Commissioners 

may legally approvp a wqiver of subrogation 

endorsement becausd the .rsnployee, under A*+ 

tide 0307, Sec. 6ij may rpaeive compensa-, 

tion from the assobjati0n~Cnd still prooebd 

against a third person foS'damag8.8,~ Galv 

H. & S. A. Ry. Co. v. We + 13 s.k;2a48( 

Civ. APP.), ami ed 121 x. 

o?subrofiation 

q10, 50 s. 

247. A waiver by the association does not i$terfere with this right, 

such waiver being 8 property right oi the 

association that may be waived. 

Ypurs ‘very truly 

ATTORNBY GXRERAL OF TEXAS 

Assistant 

APPROVED: 

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IBT ASSISTART 

AlTORREX'.~L 

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