A Federal appeals court panel has refused to allow Home Depot, which has opted out of the Texas workers compensation system, to defend itself from a workers compensation claim in federal court.

Mark L. Kincaid, a partner at George Brothers, Kincaid & Horton, LLP, based in Austin, said the decision was favorable to the plaintiff because “there is a perception” state courts are more keen to employee interests in a workers compensation case than federal courts.

“This was a big deal for the worker,” Kincaid said, “because the appeals court decided not to resolve the diversity of decisions by federal district court judges in this circuit on this issue.”

The panel of the 5th U.S. Circuit of Appeals, based in New Orleans, upheld a federal district court decision remanding the case back to Texas state courts.

The case is Mary A. Ernewayn v. Home Depot U.S.A. Inc. The decision was handed down last Thursday.

The lower court had held that even though Home Depot was a “non-subscriber” to the Texas state workers compensation system, it was still covered through a provision of state workers' compensation law that limited the number of common law defenses a company can raise in defending itself against a workers compensation claim, Kincaid said.

Before May, Texas was the only state in the U.S. that allowed a company to opt-out of its workers compensation system. In May, Oklahoma became the second state to adopt a so-called a “free-market system.”

Under the Oklahoma law, employers have to offer injured employees alternative benefit systems that are governed by the federal Employee Retirement Income Security Act.

According to officials at PartnerSource, an insurance brokerage based in Dallas that is a division of Arthur J. Gallagher Risk Management Services, Inc., a number of states are considering adopting the opt-out system.

In this case, Mary A. Ernewayn, 55, of Socorro, Texas, filed suit in state court in August 2012. She claimed Home Depot was negligent. She alleges that she suffered neck and back injuries in 2011 when operating a lumber cart in a Home Depot store that was filed with plywood. When the cart collapsed, according to court documents, she was injured when pinned between the lumber cart and a pickup truck, court records show.

Ernewayn filed suit in state court, but Home Depot sought to remove the case to federal court. It argued that because it “opted out of the Texas workers compensation system, it could defend the case in federal court.

In a decision last December in federal district court in El Paso, Judge David C. Guaderrama ruled that “any ambiguities” dealing with whether a case should be held in state or federal court are “construed against removal.” He added that, “the court concludes that the instant action is not removable, and the case therefore must be remanded.” It was this decision that the 5^th Circuit decision upheld.

Kincaid, who is also an adjunct professor at the University of Texas Law School, said he is aware that there is a perception that courts in Texas are biased against workers compensation claims. However, in practice, state courts and state appellate courts are in practice either balanced or sympathetic to workers on compensation claims. Only the Texas state Supreme Court is seen as biased against workers on these issues, but it has sole discretion whether to appeal a case, which raises a question as to whether a defendant company in a workers comp claim wants to risk winning support for state High Court review of a claim, he said.

Special Reports /

Ruling: Home Depot Can't Move Texas Workers Comp Suit to Federal Court

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