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Immunity Doesn’t Defend Native Governments From Administrative Penalties



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By Jim Sams


Political subdivisions in Texas can’t use governmental immunity to evade administrative penalties for failing to well timed pay employees’ compensation advantages, a state appellate courtroom dominated.

A panel of the third District Court docket of Appeals in Austin upheld a trial courtroom ruling the Texas Political Subdivisions Joint Self-Insurance coverage Fund should pay $132,500 in administrative penalties and lawyer charges for paying claims late, or by no means. The panel rejected an argument by the fund that the legislature didn’t move a statute to waive governmental immunity till 2019, so it can’t be assessed penalties for violations that occurred in earlier than then.


The appellate panel mentioned the statute adopted in 2019 merely clarified current legislation.

“Construing the supply at concern as a codification of current legislation is according to the related frequent legislation and with the construction of the Staff’ Compensation Act as a complete,” the opinion says.


The Texas Division of Staff’ Compensation requested an administrative legislation choose to sanction the Self-Insurance coverage Fund in November 2019 after an audit recognized a number of situations the place the fund had did not precisely pay demise advantages or precisely report declare information. Individually, the DWC sought penalties towards the fund for failing to well timed pay advantages to an injured employee that ought to have began in October 2017.

An administrative legislation choose discovered the fund had underpaid demise advantages in three instances by a complete of $384,132 and levied $125,000 in administrative penalties. The ALJ additionally agreed with the division that the injured employee’s profit funds had been late and levied a $7,500 sanction towards the fund.


The Self-Insurance coverage Fund sought judicial evaluate in Travis County District Court docket. Choose Madeleine Connor upheld the sanctions. The fund appealed once more.

The third District panel famous that the appellate courtroom first dominated in 2020 that political subdivisions are topic to administrative penalties assessed by the division, which was known as the Staff’ Compensation Fee on the time. In a case that concerned the town of Eagle Cross and the Texas Municipal League Staff’ Compensation Joint Insurance coverage Fund, the courtroom held that “as a result of municipalities and different political subdivisions of the state exist below the authority of the state and are topic to the state’s regulatory authority, such entities don’t get pleasure from sovereign immunity from state regulatory authority.”


The Self-Insurance coverage Fund argued that lawmakers didn’t waive immunity till they handed Senate Invoice 2551 in 2019. The DWC countered that the statute merely clarifies current legislation.

The appellate panel agreed with the DWC. The aim of SB 2551 primarily was to alter the declare course of that governs employees’ compensation claims by first responders’ for demise or incapacity from most cancers, the opinion says. One provision of the brand new statute states that political subdivisions that self insurer are chargeable for administrative penalties and different sanctions.


The appellate panel mentioned that an evaluation of the invoice by Senate employees known as the brand new language a “non-substantive” change. What’s extra, the panel mentioned the Texas Supreme Court docket has by no means overruled its holding in Eagle Cross and actually had cited the case that discovered the state was allowed to hunt cash damages kind a political subdivision.

The panel affirmed the trial courtroom’s determination discovering the Self-Insurance coverage Fund chargeable for the executive penalties and attorneys’ charges.


Self-Insurance coverage Fund Government Director Scott Payne mentioned the fund is upset by the choice and is evaluating its subsequent steps. He mentioned the fund is a “good performer” and administrative penalties towards it are rare.

A spokesperson for the DWC mentioned the division doesn’t touch upon pending litigation.




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