           Tn      A-TITOECNEY GENERAL
                        OF     TEXAS




                            January 8, 1970



Honorable Clay Cotten            Opinion No. M-550
Commissioner of Insurance
1110 San Jacinto Street          Re:   Eligibility of certain
Austin, Texas                          employers for statutory
                                       workmen's compensation
Dear Mr. Cotten:                       insurance.

          you have requested the opinion of this office with
regard to the above question.  In this connection you have pro-
vided the following information:

          "Art. 8309, V.A.T.S., a part of the basic
     Workmen's Compensation Law, defines 'employer'
     as any person, firm, partnership,, association of
     persons or corporations, or their legal repre-
     sentatives that make contracts of hire. Art.
     8306, Sec. 2, excepts from the applicability of
     the Workmen's Compensation Law (1) domestic
     servants, (2) farm laborers, (3) ranch laborers,
     (4) employees of any firm, person or corporation
     having in his employ less than three employees,
     and (5) employees.of any person, firm or
     corporation operating any steam;, electric,
     street or interurban railway as a common carrier.

          "Apparently the original law, by definition
     or otherwise, was intended to have applicability
     in the private business sector only, but the fol-
     lowing categories of public employees became
     eligible for Workmen's Compensation coverage at
     the times and under the statutes hereinafter
     enumerated:   (1) employees of Texas A. & M. College
     (19311, Art. 830933, V.A.T.S.; (2) employees of
     The University of Texas (19311, Art. 8309d,
     V.A.T.S.; (3) employees of Texas Technological
     College (1931), Art. 8309f; (4) employees of
     counties (1949), Art. 8309c; (5) employees of
     munioipalities (1953), Art. 8309e; (6) employees
     of independent school districts (19651, Art.




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Hon. Clay Cotten, page 2   (M-550)

    8309e-1; and (7) employees of certain drainage
    districts (1967), Art. 8309c-1.

         "Because of the above statutes, the Work-
    men's Compensation Section of the State Board of
    Insurance has regarded public employees as being
    eligible for Workmen's Compensation coverage only,
    if they come within one of the categories enum-
    erated inthe next preceding paragraph.   Also, in
    the private business sector, employees of those
    employers coming within the exceptions enumerated
    in Art. 8306 were regarded as ineligible for this
    coverage.

         "Although it is recognized that the Workmen's
    Compensation Law is not compulsory as to any
    employer, yet eligibility coupled with failure
    to obtain this coverage would result in the loss
    of certain common law defenses.. To describe in-
    surance having this effect, the Workmen's Compen-
    sation Section commonly uses the term 'statutory.'
    The term 'voluntary' or 'V.C.' is commonly used by
    the Workmen's Compensation Section to describe
    coverage bought by employers who do not come under
    the Act. Administratively, we must make a dis-
    tinction between 'statutory' and 'voluntary,'
    since the coverage and premiums are not uniform
    as between the two; and it is for this reason
    that we request the advice of your office as to
    whether the coverage of certain employers is to
    be regarded as 'statutory' or 'voluntary' as we
    have previously defined those terms.

         "We are aware of the Court's holding in the
    case of Virgil A. Dillard vs. Nueces County Navi-
    gation District No. 1 Terminal Drainage Project,
    214 F.SUDD. 868. Althouah this case was decided
    in 1963, 'as we have here&before noted the Legis-
    lature subsequently enacted specific laws which
    would make the employees of independent school
    districts and the employees of certain drainage
    districts eligible for coverage.  If, under the
    decision of the Federal Court, such districts were
    already eligible, we are unable to understand the
    necessity for this legislation.  There is still
    no specific statute making the employees of navi-
    gation districts eligible fpr this coverage.   In



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Hon. Clay Cotten, page 3   (M-5509

       any event, for our administrative purposes, we
       have continued to regard navigation districts,
       port authorities, housing authorities, river
       authorities, and in fact all other political sub-
       divisions as having purchased 'voluntary' cover-
       age if they did not fall within one of the
       categories of employers made specifically eli-
       gible to purchase Workmen's Compensation coverage
       by statute. Likewise, we have continued to re-
       gard private employers as purchasers of 'volun-
       tary' coverage, if such employers fell within
       one of the exceptions of Art. 8306, V.A.T.S.

            "In 1967, the 60th Legislature enacted
       House Bill 680, which was published as Sec. 18
       of Art. 8308, V.A.T.S.  This law seems to make
       any employer eligible to purchase Workmen's
       Compensation coverage with one exception only.
       The exception is any employee or classification
       of employees for whom a rule of liability or a
       method of compensation has been established or
       may be established by the Congress.of the United
       States.

            "All premises considered, we respectfully
       request your instructions as to which, if any,
       employers, either in the private business sector
       or in the public employment sector, may still be
       regarded as having purchased 'voluntary' compen-
       sation insurance as opposed to 'statutory' compen-
       sation insurance."

           In City.of Tyler v. Texas Employers Insurance Association,
288 S.W. 409 (Comm.App. 19261, the Court stated that the Legis-
lature was without constitutional power to authorize cities and
towns to provide workmen's compensation insurance for their em-
ployees, and this principle of law.was applicable to other politi-
cal subdivisions of the State. Subsequent to the City of Tyler
case, various constitutional amendments to the Constitution of
Texas have been adopted, removing from-the Constitution the pro-
hibition relied on by the Court. The following constitutional
amendments authorize the Legislature to pass laws for workmen's
compensation coverage for certain designated employees, to-wit:
Article III, Section 59, for State employees (1936); Article III,
Section 60, for county and other political subdivision employees
 (1948 and 1961); Article III, Section 61, for city, town and
village employees (1952).



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    Hon. Clay Cotten, page 4   (M-550)

              In Dillard v. Nueces County Navigation District No. 1
    Terminal Drainage Project, 214 F.Supp. 868, a claim by Dillard
    for workmen's compensation benefits was adiudicated.  A "voluntarv"
    (as the term is used in State Insurance Board administrative
    practice) workmen's compensation insurance policy had been pur-
    chased by the navigation district.  After reviewing all of the
    Texas case law available the Court concluded that:
              I,
               . . . a navigation district may become a
         subscriber for workmen's compensation insurance
         for its employees , provided it does so in an old
_        line legal reserve company."

              Our research reveals that pursuant to such decision, the
    Texas Industrial Accident Board took jurisdiction of the claim in
    the above case and has consistently thereafter to this date taken
    jurisdiction of workmen's compensation claims of employees of
    such political subdivisions,and its administrative practice and
    construction of the law supports that of the Texas Insurance
    Commission to the effect that the purchase of such insurance is     -
    "voluntary" coverage as opposed to "statutory" compensation in-
    surance, as those terms are used in State Insurance Board administra-
    tive practice.  This office is in agreement with that construction,
    which will be given great weight by our courts. Humble Oil and
    Refining Co. v. Calvert, 414 S.w.Zd 172 (Tex.Sup. 1967).

               You are accordingly advised that navigation districts,
    water districts and river authorities which provide workmen"s
    compensation benefits under the principle of law announced in
    the ,Dillard case'may be regarded as having purchased "voluntary"
    compensation insurance as opposed to "statutory" compensation
    insurance, as the term "voluntary" and the term "statutory" is
    used in the State Insurance Board administrative practice.   In
    the private sector, any employer who does not waive common law
    defenses for failure to provide workmen's compensation benefits
    muat be designated as a "VoluntarQ" purchaser in accordance with
    your administrative definitions.

                               SUMMARY

              Navigation districts, water districts and
         river authorities which provide workmen'scompensa-
         tion benefits as well as private employers who
         do not waive common law defenses for failure to
         provide workmen's compensation benefits, should be
         regarded as having purchased "voluntary" compensa-
         tion insurance as oppose~d to "statutory" compensa-
         tion insurance as the term "voluntary" and the


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Hon. Clay Cotten, page 5    (M-550)

        term "statutory" is used.in the State Insurance
        Board administrative practice.




Prepared by John Reeves
Assistant Attorney General
APPROVED:
OPINION COMMITTEE
Keens Taylor, Chairman
Alfred Walker, Co-Chairman.
Roger Tyler
Wayne Rodgers
Houghton Brownlee
Jay Floyd
MEADE F. GRIFFIN
Staff Legal Assistant
NOLA WHITE
First Assistant




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