# 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

. Nameof 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 ~toTexas 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 mayat 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 maybe necessary, and may enforce, in the name of the injured employee or of his legal beneficiaries or in its ownnameand 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 sumgreater 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 sumso 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 ~,compensatioa , the cause of action remains alive. Hemaythen 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 SW2d 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 nowwell-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 compensationHon. 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=~tZlel%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$‘s overruling appellant’s plea in abatement, and is .- ba,sed on article 8307, Seo. 6a, R. S. Wethink the assignment should be overruled. The Texas Workmen’s Compensation Law, the provision of which is invoked by appellant, evidently contemplates that the injured employee is the real beneficiary in cases where the damages suffered exceed, as’ they most always do, the amount received by the employee from the indemaifying association. It has been frequently held that in equity the real beneficiary mayalways be permittea to sue for the protection and enforcement of his right where the party having the ‘mere legal title or right fails or refuses to do so..
..The statute invoked does not destroy or abrogate appellee’s cause ef action, and it is well settled that when the i$- demnifying association fails to sue, es it aidhere, the injured employee, or his beneficiary, maydo so, although compensation under the law mayhavs~bpen claimed and.received. GalMst;on”R; &S. A. Rail-

..‘~Fb,“.rl.‘~:W~~19fT(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, whereHon. 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 nameend 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 maybe 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 maylegally approvp awqiver 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 + 13s.k;2a48( Civ. APP.), ami ed 121 x.

o?subrofiation q10, 50 s. 247. Awaiver by the association does not i$terfere with this right, such waiver being 8 property right oi the association that maybe waived. Ypurs ‘very truly ATTORNBY

GXRERALOFTEXAS

Assistant

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IBT ASSISTART AlTORREX'.~L JHR/rt :jrb