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ASA President’s Letter—October

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ASA President’s Letter—October

Dear ASA Members,

A Texas trial court’s misinterpretation about a wrap-up insurance case illustrates one of the main reasons my company continues to be a member of ASA year after year and underscores the important work our Association does to preserve and protect the rights and interests of subcontractors in our industry.

ASA’s judicial advocacy efforts, through its Subcontractors Legal Defense Fund, provide an essential role in assuring that misinterpretations or bad decisions by courts are not left standing to adversely affect subcontractors, and worse, set precedence across the country for other courts to reference. By including judicial advocacy in our comprehensive government advocacy efforts—legislative, regulatory and executive—ASA covers all the bases to ensure that subcontractors get a fair shake in the construction marketplace. As a subcontractor, this is extremely important to me. And it should be for you, too.

On Sept. 25, ASA and six others in the construction industry filed an amici curiae, or “friends of the court,” brief, financed through the SLDF, in a case where an owner-controlled insurance program in which a contractor and subcontractor were participants “performed” just as it was designed—to provide workers’ compensation benefits to all participants of the program. Yet, a trial court ruled that they were “excluded” and were subject to a civil suit for the death of an employee on a project. ASA and the others urged a Texas appeals court to reverse the nearly $54 million judgment against them, emphasizing that insureds must be able to depend on the workers’ compensation policies and Texas laws that they rely on to protect against the many risks inherent in the construction process.

In the case, Texas A&M University hired Manhattan | Vaughn as a general contractor on a $4.5 million project to expand and renovate Kyle Field, and Manhattan | Vaughn hired Lindamood Demolition as a subcontractor to perform demolition work. The project was insured under an OCIP purchased by Texas A&M, and both the GC and subcontractor were OCIP participants. An employee of the subcontractor, Angel Garcia, fell to his death when a piece of machinery he was operating was overloaded and tipped over and fell. The family sued. The GC and subcontractor have appealed.

“Manhattan | Vaughn provided workers’ compensation insurance as contemplated by the [Texas Workers Compensation] Act, coverage was in place, and the Garcias received workers’ compensation benefits as prescribed for Mr. Garcia’s unfortunate death,” ASA and the other amici curiae said. “As a result, the exclusive remedy rule applies. The trial court’s ruling to the contrary runs afoul of a substantial body of Texas case law and frustrates the purpose of the Act. It also ignores the most recent Texas Supreme Court precedent interpreting OCIPs, which unequivocally extends exclusive remedy protection throughout all tiers on a project and provides an alternate means for extending exclusive remedy protection to Manhattan | Vaughn.”

ASA and the amici curiae continued, “... the death of Angel Garcia was a terrible and heart-rending occurrence. But the mechanism contemplated in the [Texas Workers Compensation] Act performed flawlessly, and Mr. Garcia’s family received their statutory benefits in exchange for giving up the right to sue their employer. They were not left without a remedy.”

Patrick J. Wielinski and Travis M. Brown of Cokinos Young, Irving, Texas, filed the brief for ASA and the others. ASA cannot continue its work in support of subcontractors unless it has the funds to pay for participation in the court cases that matter most to subcontractors. With your voluntary contributions, ASA can marshal the financial resources needed to continue to invest in precedent-setting litigation to establish subcontractor rights.

As subcontractors, we know we need to be mindful about the costs and risks of participating in a controlled insurance program. Fortunately for ASA members, the ASA Subcontract Documents Suite helps us address costs and risks of wrap-up insurance policies through the ASA Subcontractor Bid Proposal, ASA Wrap-Up Insurance Bid Conditions, and ASA Wrap-Up Insurance Subcontract Conditions. The Suite is a no-cost benefit for members available under “Contracts & Project Management” in the Member Resources section of the ASA Web site. ASA also provides members with a white paper, “Consolidated Insurance Programs: Using ASA Tools to Address Costs and Hidden Risks,” which is very informative and useful. It is also located in the Member Resources section under “Insurance and Risk Management.” I strongly encourage you to familiarize yourself with the tools in the Suite and contribute to the SLDF; it’s good for subcontractors and business.

Sincerely,

Jeff Banker
2017-18 ASA President

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