The importance of legal contracts cannot be understated. Though we generally sign contracts on social media or online shopping websites without ever looking at their provisions, it is essential to carefully look at contractual provisions in insurance policies and the like. For example, you never want to discover that your injury is not covered by insurance after you have been injured.
Adam O’Bannon, a Louisiana resident, was an employee of Moriah Technologies, Inc. (“Moriah”), a Texas corporation. In June of 2012, O’Bannon injured himself while working as a Moriah employee. Texas Mutual Insurance Company (“TMIC”) was Moriah’s workers’ compensation insurer. However, TMIC did not provide any workers’ compensation to O’Bannon.
Bannon argued that TMIC owed him workers’ compensation and filed a claim with the Louisiana Offer of Workers’ Compensation (“OWC”) against TMIC. At court, TMIC asked the workers’ compensation judge (“WCJ”) to dismiss O’Bannon’s claim through a motion for summary judgment because its policy did not provide coverage to Moriah for O’Bannon’s workplace injury. The WCJ agreed and dismissed O’Bannon’s case. O’Bannon appealed, arguing that the WCJ erred in holding that TMIC did not have a policy that provided O’Bannon workers’ compensation.
According to Louisiana law, an insurer who wishes to avoid giving compensation through a summary judgment motion must show proof that some exclusion applies to preclude coverage. A workers’ compensation insurance policy, like any other insurance policy, is a contract interpreted according to ordinary contract principles. Sims. v. Mulhearn Funeral Home, Inc., 956 So.2d 583, 589 (La. 2007). In general, when the words of an insurance contract are unambiguous, courts must enforce the agreement as written. La. C.C. art. 2046. If ambiguities exist, they must be interpreted in favor of the insured rather than the insurer since insurance policies are meant to effect coverage. La. C.C. art. 2056.
The Appellate Court began its analysis by examining the insurance contract between Moriah and TMIC. It found that the agreement did not have a policy that provided insurance for non-Texas employees or for giving compensation to non-Texas employees through other states’ insurance. Specifically, it stated that employees hired or recruited outside Texas to work in another state are excluded from TMIC’s coverage. According to the Texas Labor Code, a Texas employee has “significant” relations with Texas or one whose employment is principally located in Texas. Furthermore, a Texas employee working outside the state is entitled to Texas workers’ compensation if the injury would be compensable if it occurred within Texas.
Applying Texas laws since TMIC is a Texas-based insurance company, the Appellate Court first noted that there was no evidence that O’Bannon’s injury would have qualified for compensation if it had occurred in Texas. Second, the Appellate Court pointed out that O’Bannon had no significant relations with Texas since his employment was in Louisiana, not Texas. In fact, after his injury, O’Bannon began work in Tennessee for Moriah. Because of these uncontested facts, the Appellate Court ruled that O’Bannon was not a Texas employee and was thus not covered by TMIC’s insurance policy.
Unfortunately for O’Bannon, the insurance contract clearly did not provide coverage for employees like O’Bannon, who were not Texas employees at the time of the injury. Though the Appellate Court’s ruling may offend our sense of justice, courts cannot simply interpret explicit contracts. This case shows why reading contracts before taking on a job is extremely important.
Additional Sources: O’Bannon v. Moriah Technologies, Inc.
Written by Berniard Law Firm Blog Writer: Peter Lee
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