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A hotel can maintain its defense under the exclusive remedy provision of the Workers Compensation Act against the claims made by a worker who was sexually assaulted during her shift.
In Re Tah Investments LLC, a three-judge panel of the Court of Appeals of Texas, 14th District, in Houston unanimously held on Thursday that a judge abused his discretion in forbidding the hotel from using its defenses as a sanction for a discovery mistake.
After a hotel worker on the night shift was sexually assaulted, she filed a complaint against hotel owner Tah Investments Inc., in Dallas, alleging that the hotel negligently failed to provide adequate security measures. The hotel, however, claimed that the worker was employed by a staffing company under contract with the hotel. The hotel did not have a workers compensation policy in place at the time of the incident, and during discovery, stated that it did not maintain a policy.
The staffing firm did maintain a valid workers compensation policy, and in the 300-plus-page policy, the hotel was identified as an additional insured. However, the hotel did not realize it was covered under the policy until late in discovery and after the counsel of sexual assault victim had incurred the expense of three expert depositions at a cost of nearly $50,000. As a result, the plaintiff’s attorney filed a motion for sanctions, asking the trial court to strike its workers compensation defense and award monetary sanctions for the failure to respond truthfully in discovery.
The judge in the 269th Texas District Court in Harris County, Texas, struck the hotel’s workers compensation defense and prohibited it from offering evidence related to the exclusive remedy provision of the Texas Workers Compensation Act. The hotel filed a motion for reconsideration, which was denied.
The hotel appealed to the Texas Appeals Court, which vacated the decision, finding that the judge abused his discretion and that striking the hotel’s affirmative defense “is a death-penalty sanction.”
The hotel provided the plaintiff’s counsel with the workers compensation policy held by the staffing company, but the court noted that the plaintiff’s counsel did not open and read the policy, assuming it was a commercial general liability policy that had been previously produced.
The court found that the hotel’s delay in amending its discovery to “more fully” disclose its workers compensation defense “did not justify any presumption that its defense lacked merit” and that the judge abused its discretion by denying the hotel’s motion to reconsider a sanctions order that adjudicated its affirmative defense.
The attorney for the plaintiff, Lennon Wright, said he intends to file a motion for a rehearing. Neither the hotel nor its attorney immediately responded to requests for comment.
Employers and their partners in the workers compensation sector are breathing a collective sigh of relief after a California Supreme Court ruling firmly preserved the “Grand Bargain” at the heart of the comp system.