Don’t Fall Down on the Job in Texas: Employers Don’t Have to Provide Injury Coverage

Don’t Fall Down on the Job in Texas: Employers Don’t Have to Provide Injury Coverage

All he remembers feeling while lying on the semi-truck trailer’s steel floor was someone pounding his knee with a hammer.

Andrew Ellis had just rolled into a little town outside San Antonio to drop off a load at a hardware store. He was using a two-wheel dolly to unload a bundle of PVC pipes from the truck bed when, as he was pulling with full force, the pipes slipped and the laws of gravity sent Ellis tumbling backward. He could feel his left knee pop. He thinks the laces of his boot may have caught a rivet as he was on his way down, causing the joints in his knee to contort out of place — but he isn’t 100 percent sure. Almost worse than the pain, in the days and weeks following, was Ellis’s memory of what happened. All he could remember for certain was that persistent pounding, and not being able to move.

And that’s ultimately why the truck driver wasn’t going to receive any medical care for his injury, a torn meniscus — at least not on his employer’s dime. “I guess I have a hard time explaining myself,” Ellis lamented more than two years after the injury, sitting in the back pew of the church where he lived for several months after he became homeless, jobless and crippled.

How that happened is all very simple: Interstate Distributor’s insurance company, Providence, denied Ellis any coverage under Interstate’s workplace-injury benefit plan because of one small inconsistency in his verbal and written statements. When speaking about his injury, Ellis said that his knee “gave out.” And that layman’s-language slip-up was going to cost him — a lot: “Your knee ‘giving out’ does not meet the definition of an accident, nor does it meet the definition of an injury,” the insurance company wrote to him.

No benefits for Andrew.

When he didn’t show up for work because he couldn’t walk, he was fired. (When he called HR, they informed him he had quit.) No longer able to afford the $600-a-month rent at his uncle’s apartment in Waco, Ellis ultimately moved into a storage room at his church in southeast Houston in which the folding chairs were kept. At night, he slept on the couch in the pastor’s office. During the day, he limped. “It hurt to look at,” says his pastor, Rickey King.

Ellis didn’t have surgery until 15 months later. It was paid for thanks to his attorney James Grantham’s “letter of protection” — a promise personal injury lawyers make to doctors that they’ll pay the bills with the money they win in a settlement. Ellis’s case went to arbitration last March, and he won $268,000. But he didn’t receive payment until December — 33 months after he got hurt.

Ellis says he felt as if he’d been treated worse than his dog — which he left with his uncle, knowing he wouldn’t be able to take care of it. He wishes Interstate had abided by the same principles: If the company couldn’t afford to take care of him, then why would it hire him? “They left me on the side of the road to get run over — that’s the way I feel,” he says.

Grantham, however, says that Ellis’s case is nothing special. He’s got a mountain of roughly 150 cases just like it piled in his law office from clients who didn’t read the small print when they got hired. Nearly all of them thought their employer had workers’ compensation, Grantham says, and almost none of them believe him when he tells them they are wrong.

Texas is the only state in the country, and among few jurisdictions in the Western world, that doesn’t require employers to provide any workplace-injury coverage at all. An estimated 470,000 people in Texas are entirely on their own should they get hurt at work.

Another 1.4 million employees are covered under what Grantham calls “fake comp” policies — more formally known as “non-subscription policies,” the type of plan Interstate Distributors had. In this kind of plan, employers get to make their own rules, which commonly include provisions that an employee must report any injury by the end of his shift or within 24 hours in order to receive benefits (as opposed to 30 days under workers’ comp); that a supervisor must tag along with the employee to doctors’ appointments (“personalized attention,” the plans brag); and that the employee’s benefits cut off after 50 to 120 or so weeks — compared to 401 weeks, plus the possibility of lifetime benefits, offered under workers’ comp.

If an employee dies on the job, more than half of non-subscribing employers offer nothing to that person’s family, according to the Texas Department of Insurance.

There’s also nothing in Texas state law that prevents non-subscribing employers from firing an employee the second he decides to tell them his back hurts. “It’s absolute corporate control with no oversight or accountability,” says Richard Levy, secretary-treasurer of the union organization Texas AFL-CIO. “But other than that, they’re pretty good plans.”

And they’re extremely attractive to some of the most visible employers out there, including Taco Bell, Walmart, McDonald’s, H-E-B, Costco, Home Depot and Macy’s. They cover average paycheck-to-paycheck people who are often as replaceable as lightbulbs, who frequently work minimum-dollar jobs 40 hours a week. Grantham says he is pretty sure that, if he held a free hotdog day at his office, the majority of his struggling injured clients would line up down the block. “This is destroying people’s lives,” he says.

And it’s something that should concern not only those without workers’ comp, but everyone else in Texas, says Trey Gillespie, senior workers’ compensation director at Property Casualty Insurers Association of America, a private-insurance advocacy organization. When workers are left without medical care from employers who have opted out, someone else is left paying for the surgery. And often those costs are shifted to taxpayers, whether in the form of Medicare and Medicaid, or higher private insurance premiums and higher hospital bills.“The behavior of employers in Texas clearly demonstrates that opting out is for one purpose: cost savings,” Gillespie says.

To non-subscription’s biggest supporters, however, who are promoting non-subscription to legislatures across the country, that statement couldn’t be further from the truth. Bill Minick, president of Partnersource, which authors about half of Texas’s opt-out plans, summarizes the benefits of the plans this way in an email to the Houston Press: “Injured workers are getting better, faster, with fewer disputes, and commonly receive more wage replacement than workers’ compensation provides.” And, says non-subscription’s main lobbyist in Texas, Richard Evans, non-subscribers take safety “really seriously, because they have this risk of liability.”

In other words, employers can still get sued for a million bucks following an unresolved workplace injury — a risk many employers are not willing to take, Evans says. But to many workers’ rights advocates and attorneys, the problem with relying on lawsuits is that they don’t fix the ruptured discs and contorted knees that keep workers from making a living. By the time these workers have their day in court, it could be two or three years since they fell off the ladder. Which is why, to them and the people who represent them, the present day sounds awfully similar to the 19th century.

Andrew Ellis lived in the storage room at his church in the months following his on-the-job injury, which left him limping, out of work and with no medical benefits from his employer.
Andrew Ellis lived in the storage room at his church in the months following his on-the-job injury, which left him limping, out of work and with no medical benefits from his employer.
Photos by Daniel Kramer

The story of how Texas became the only place in the country to strip away thousands of workers’ access to the century-old workers’ comp system is rather straightforward: It never progressed.

The country was still entrenched in the Industrial Age and toiling in The Jungle-esque working conditions at the time workers’ compensation laws rose to prominence. Before 1913, when Texas passed its own version of workers’ comp, injured workers relied primarily on the common law when seeking recourse for on-the-job accidents. Once in court, employers could use “employee negligence” as a defense or could argue that employees “assumed the risk” of getting an arm sliced in half when they took the job, or even that a co-worker had caused their injuries. And so all too often, the employers won.

Workers’ comp changed that. It provided immediate financial and medical help to injured workers without their having to prove the accident wasn’t their fault — or their co-worker’s. And it also protected employers against costly lawsuits. The law ultimately became known as “the great compromise.”

But even back then, employers in Texas (and many other states) could choose to opt out of the new workers’ comp system and risk the lawsuits. For those employers, the new rule was that they could no longer use any of their favorite “employee negligence” defenses to win.

Finally, in 1972, the National Commission on State Workmen’s Compensation Laws recommended workers’ comp become mandatory everywhere — but Texas was the only state that never made the transition.

“Not only the only state in the union, but every Western democracy,” says personal injury attorney Jon Alworth. “Even going back to Russia at the beginning of the 20th century, they had mandatory workers’ compensation. It’s just bizarre.”

Alworth says that, today, the common-law right to a jury that has persisted since pre-workers’ comp days often doesn’t even apply to non-covered employees anymore. Most non-subscription plans ask employees to sign away their right to sue in court and instead to take their disputes to arbitration, as in Andrew Ellis’s case. In that system, employers pick, and pay, the arbitrators. “While many arbitrators are fair and try to do a good job, it puts a slant on the system,” Alworth says. “People know where their bread’s buttered, so to speak. And certainly, any arbitrator that’s consistently awarding big money to plaintiffs is not going to be viewed very favorably by employers in the future.”

Although Texas employers have had the ability to opt out for the past century, it wasn’t until the 1980s that alternative benefit plans really became widespread. That’s largely because the state workers’ compensation system was in trouble: Thanks to a rising number of injuries calling for wage-replacement benefits — many of which were for permanent disabilities — insurance premiums skyrocketed, leading scores of employers to begin exiting the system and writing their own rules. “That started the modern era of non-subscription,” says Evans, head lobbyist at the Texas Association of Non-Subscribers.

Those who chose to opt out could also escape the administrative demands that are part of the workers’ comp system — and those hassles were much worse in the ’80s. Lawmakers hadn’t closely examined the system in more than 20 years, and a Senate committee wrote in 1982 that “Texas literally has no substantiated idea how good or bad its workers’ compensation system is.” Of several recommendations another committee made later in the decade (most of which became law), one was to mandate workers’ comp for everyone — but lobbyists fought it aggressively, as they’ve done several times since, prevailing each time.

Cathy DeWitt, vice president of the Texas Association of Business, has said that mandatory comp would be the “demise of the Texas economy.” DeWitt says that, if the state system were ever to become as overwhelmed with claims as it was in the 1980s, and if employers did not have the option to leave the system, they would simply leave the state instead. “As we know, there are peaks and valleys to our workers’ comp system,” she says. “I think it’s unfair to businesses for there to not be that choice when it does reach one of those valleys.”

The advertised benefits of non-subscription pitched to companies today have less to do with workers’ comp premiums and more to do with efficiency: better medical care, faster return-to-work rates, better benefits, and fewer injuries. It’s all part of a culture that employers communicate to their workers, Evans says. “It’s not just something that sits in a book.”

But for Janice Hayes, who slipped on fresh wax at Walmart, fell backward and hit her head on concrete, that’s exactly what it was.

Hayes felt a little dizzy when she stood up that morning, so she went to tell her manager what happened. Hayes had no idea Walmart didn’t have workers’ comp, and had never seen its alternative policy (one that was authored by Partnersource) — yet as it turns out, she was already following its rules. Evans says the stringent 24-hour reporting window is in place so that employers can get their workers medical care as fast as possible and address any workplace hazards immediately. But instead of sending Hayes to a doctor right away, the on-call nurse told the manager over the phone to just give Hayes an ice pack. Then the manager offered to buy Hayes new pants, because hers were all waxy. “I was like, Are you not taking this seriously? I don’t want new pants,” Hayes says.

Hayes worked for three more days, until the pain in her head became too much, and finally her manager said she could go to the emergency room — as long as she took a urine test with her (per Walmart’s policy, which also allowed the manager to follow her there). When ER doctors found on a CT scan that Hayes had a concussion and an acute cervical sprain, Walmart agreed to send her to its own doctors (non-subscribers usually pick the doctors for employees — and they won’t pay benefits if employees go to anyone else.). “I thought, Yay!” Hayes says. “Finally I can find out what’s really going on with me.”

Non-subscribers claim this careful selection of doctors results in better medical care, and since employees allegedly receive it immediately, it also results in those faster return-to-work rates. Which was certainly the case for Hayes. When the insurance adjuster sent Hayes to see a neurologist, the doctor pinched her a few times, hit her on the knee with a little mallet and bent her fingers backward, among other things. The doctor, Martin R. Steiner, concluded that since she never lost consciousness, there was “no medical evidence” to support a diagnosis of concussion, and since she passed all his tests, there was nothing wrong with her and no need for an MRI. He sent her back to work at full duty.

Last November, when Steiner (who has since died) talked with the Press about an unrelated workers’ comp claim involving a man with a neck injury (Steiner didn’t agree with a surgeon’s diagnosis in that case), he commented, “for a lot of these people, there’s secondary gain involved. You have to keep that in perspective.”

Hayes sought a second opinion and got an MRI — thanks to help from her attorney, Grantham. The resulting diagnosis: a herniated disc in the back of her neck, which was causing the pain to shoot into her head. But when Hayes called the insurance adjuster, the adjuster told her Walmart was sticking by Steiner’s opinion, Hayes says.

Hayes went on unpaid leave, because her non-Walmart doctor told her she shouldn’t be working. Her daughters are keeping the lights on at home. With no paycheck, Hayes can’t pay for her health insurance, and the surgery will cost $160,000. Grantham is trying to find a doctor who will accept his letter of protection.

According to a 2010 survey by Stanford University law professor Alison Morantz, 89 percent of non-subscribers list “cost savings” as a major reason they decided to opt out of workers’ comp. Partnersource alone has claimed that its opt-out clients have saved more than a billion dollars in the past decade. Still, Evans says that lower costs are just an added bonus, not the main goal.

But when pressed for data on how benefits like better medical care or faster returns to work can be proven, Evans did not have any statistics — apparently because they do not exist. Non-subscribers are required to report to the state only the fact that they are non-subscribers, and any injuries their workers sustain. (And they don’t even do that: The Texas Department of Insurance estimates that just 12 percent of non-subscribers complied with those meager requirements in 2014 — which appears to void their “fewer injuries” argument.)

Even if all the benefits cited are real, that doesn’t change the fact that there is little protecting injured workers from being fired as soon as they take a bad fall. Non-subscribers claim that their employees are protected under a 1974 federal law, the Employee Retirement Income Security Act — but Grantham says that’s not nearly enough. In order for employees to win a federal case, Grantham explains, they have to show that their employers’ actions were “arbitrary or capricious” — in other words, as long as employers can prove they weren’t acting irrationally when they fired a person and were following their written plan when denying benefits, they win.

The Texas Supreme Court took up the issue once, in 1998, hearing the case of an injured railroad worker who was fired after he filed a lawsuit against his employer. The company did not have workers’ compensation — and that was the reason the court decided its railroad workers could not be covered by the protections workers’ comp offers, including protection from being fired following a workplace injury dispute.

The decision was authored by Governor Greg Abbott, then a Supreme Court justice.

Belinda Smith said she felt Home Depot turned its back on her following her workplace injury — one that ultimately called for a $389,000 surgery.
Belinda Smith said she felt Home Depot turned its back on her following her workplace injury — one that ultimately called for a $389,000 surgery.

‘Happy anniversary,” 62-year-old Belinda Smith says to herself, remembering that exactly a year ago, she was fired from Home Depot after 12 years on the job.

Smith ruptured discs in her lower back while lifting five-gallon paint cans. It wasn’t the first time she’d been hurt at work. She had already been through the workers’ compensation system in North Carolina when she hurt her shoulder during airplane turbulence as a flight attendant in the late 1990s, and everything was fully covered. “They took very good care of me,” Smith says. She thought it was going to be the same in Texas.

Even if Home Depot had workers’ compensation, though, it wouldn’t have been. According to the National Academy of Social Insurance, Texas employers offer the lowest workers’ comp benefits in the country as a share of payroll, aside from Washington, D.C. — yet another reason Alworth, Smith’s attorney, says Texas has “the worst possible treatment of injured workers anywhere in the world.” But at least, Alworth says, what happened to Smith likely could not have happened under workers’ compensation.

First, Home Depot’s insurance denied Smith’s claim, because she did not report the injury in 24 hours.

And that doesn’t make much sense to Smith, who says she called her supervisor within minutes to tell him what had happened. The pain was shooting down her leg, and Smith had to literally drag it as she walked. But instead of immediately filing an injury report, her supervisor sent her to the plumbing department. When he saw two other employees helping Smith compact boxes, he finally told her to go home.

Smith, denied coverage by the insurance adjuster since no injury report had been filed that day, sought her own medical care using her Home Depot health insurance. Though she was in pain, she continued to work for one month after the injury. “What was I to do?” she says. “I didn’t want to lose my job.” But then when it hurt too much, she opted to go on unpaid medical leave. Unable to pay rent, she was evicted. Unable to pay her health insurance premiums, she eventually stopped receiving medical care, too. It wasn’t until she became eligible for Medicare that Smith got what she needed. Nearly two years after her injury, taxpayers finally paid for Belinda Smith to get better. The surgery, a 360-degree spinal fusion, which included rods and screws to keep her spine stable, cost $389,000.

The fact that Home Depot wasn’t signing that check is exactly the reason Gillespie — who studies workers’ comp and non-subscription for Property Casualty — finds it troubling that non-subscription plans are marketed as “responsible alternatives” to workers’ compensation.

“The public policy behind workers’ compensation is for the employer to take responsibility for the cost of these losses — not transfer them back to injured workers or taxpayers,” Gillespie says. “Non-subscription skirts all of that.”
Gillespie, using his own methodology, estimates that taxpayers, injured workers themselves and others, not employers, pick up $209 million in uncompensated workplace injury care per year.

But this is an extremely low estimate, Gillespie says, because he has data on only a few key groups: the 470,000 workers who have no coverage whatsoever; the 266,000 workers covered under a non-subscription plan that pays lost wages but no medical care; and the average number of employees whose injuries last longer than three years — that’s when the nicer non-subscribers’ benefits cut off. What his estimate doesn’t include is the untold number of injured workers like Belinda Smith and Andrew Ellis and Janice Hayes: workers with injuries who were turned away for reasons they didn’t quite understand.


To state Representative Armando Walle (D-Houston), the odds of getting bills onto the floor that would force more regulations on non-subscribers are about as likely as winning $1 billion in the Powerball lottery. “It’s like David versus Goliath — except Goliath is on steroids,” he says.

He has tried to draft legislation that would require non-subscribers to report data to the state, to prove their system is as good for workers as they say it is. “They argue that they have better rates of return to work. I say, okay, well we have a bill for that. We want the data. We want non-subscribers to comply just like comp companies do, just on the reporting.” But the bill has gone nowhere.

He has tried to draft legislation that would mandate workers’ compensation in construction alone, one of the most dangerous industries out there. In Texas, hard-hat wearers suffer the highest fatality rate in the country. “And not having any coverage? Whatsoever? I want to cuss it, to be honest with you,” Walle says. That bill also went nowhere.

So far it hasn’t mattered what tactics Walle uses to explain why these bills are important. Even when he brings in seriously injured workers whose families cry in front of state lawmakers, the regulations remain unchanged.

One workers’ rights advocate in Houston, Martha Ojeda, has brought the story of a man named Geronimo — whose leg literally got chopped off in a freak accident while he was working on the side of the road — to any lawmaker who would listen. The construction worker got smashed into a roadside barrier when an erratically moving pickup truck slammed into him. Geronimo needed a leg amputation — and because his company offered him zero coverage, taxpayers, again, picked up that tab, this time through Medicaid.

Stories like this one have led Walle to conclude that workers in Texas simply do not have a voice. “There’s been a systematic rejection of workers’ rights in Texas, and all for profit,” he says. “What we’re doing is we’re creating a permanent underclass of workers.”

Competing interests between workers’ rights advocates and business lobbyists have been well-documented since the ’80s. The same Senate committee that noted in 1982 that Texas had absolutely no idea how its workers’ comp system was operating also went on to say that “competing interest groups provide information to support their own positions, but what has emerged has not been a synthesis of available data, but rather a fragmented, parochial, seriously qualified collection of numbers that is so amorphous as to be almost meaningless.”

Reforms that followed required the Texas Department of Insurance to compile much more data about the workers’ comp system so that lawmakers could use the information to make changes. Today, the state issues surveys to injured employees and analyzes health-care costs, how disputes are resolved and how quickly workers return to work, among other things. While the data may illuminate problems, says union leader Levy, at least lawmakers can see those problems; as for non-subscribers, all lawmakers know is what non-subscribers tell them. “Everything is privatized. There’s no data showing outcomes, there’s no due process, there’s no oversight,” Levy says. “And so it’s kind of back to the future, where the whole idea of how we treat injured workers is being threatened by these private companies that seek total control of the system.”

Meanwhile, people like Bill Minick and Richard Evans and the Association for Responsible Alternatives to Workers’ Compensation are trying to sell non-subscription to legislators around the country. They were recently successful in Oklahoma, where, although employers can now opt out of statutory workers’ comp, their benefit plans must provide benefits equal to or better than those provided by the state plan — and no one is allowed to hang workers out to dry. The spread of alternative plans outside Texas state lines led NPR and ProPublica to jointly investigate whether this really was the best thing for workers, and their analysis of 120 alternative plans was the first time anybody had independently studied them. Their conclusion: While it’s true that some non-subscription plans in Texas do offer better wage-replacement benefits (100 percent compared to workers’ comp’s 70 percent), the vast majority of non-subscribers still offer worse benefits than workers’ comp because of their restrictive nature, their shorter benefit durations and the fact that those benefits are taxed.

The analysis also found that some language in the new Oklahoma law was nearly identical to language in Bill Minick’s Partnersource plans — specifically Walmart’s.


It will be three years this March since Andrew Ellis went to the emergency room.

Ellis started to get back on his feet several months ago. He can walk without leaning on a cane. He doesn’t have to sleep on a couch anymore. And he has his own business as a self-employed truck driver, leasing a truck from a company in Arkansas that feeds him long-haul jobs across the country. When he’s home in Houston, he volunteers at the church that offered him basic needs when his employer stole them away.

His favorite job: teaching Sunday School to the kids and having them act out Old Testament scenes as camels and Bible characters. He mentions that it’s the only time he feels loose, like he can be himself without having to worry about stuttering or stumbling over his words. His pastor is still providing him counseling on how to improve his communication skills — a problem that prevented him from finishing school, affected his relationships and, for a brief period, destroyed his life.

But by now Ellis is past all that, believing it has made him a more patient person in the long run. And he says he doesn’t have to worry about getting tossed to the side of the road again.

“This is why I started my own company,” he says. “I wouldn’t treat anybody like that.”


Fault Lines: When Patricia Perez was injured on the job, her employer told her it was all her own doing.

Getting hurt while working at McDonald’s at 2 o’clock in the morning was just as bleak as it sounds. 

But for Patricia Perez, what was ultimately worse was the lack of medical help she received from her employer, she told the Houston Press last fall, a week after an arbitrator heard her case — one she would ultimately win.

The night Perez screwed up her back, she had to bear-hug an empty iced tea dispenser because it had a broken handle. As she was setting it down, she felt her back pop. McDonald’s, which doesn’t have workers’ compensation and instead offers an alternative benefit plan, did finally agree to send her to its company doctor. He diagnosed her with a lumbar strain, recommended some physical therapy and a back brace, sent her back to work and ultimately concluded, “No further medical care necessary.” Perez, still in pain, sought an independent doctor at the advice of an attorney she contacted, James Grantham. Soon she learned that actually a disc in her spine had slipped and was protruding into her muscle. But that didn’t matter to McDonald’s — it was done helping her.

The attorney for McDonald’s declined to comment, though records show that McDonald’s argued that, since Perez was well aware the container was broken, didn’t ask for help and didn’t move it with a cart (one that Perez said never existed until one month before a McDonald’s supervisor gave her deposition), McDonald’s was not at fault in her injury. “It was not the container that caused the injury,” one record said. “It was Ms. Perez[’s] handling of a heavy [full] tea container.”

“I Googled the manufacturer of the ice bucket,” Grantham said, “printed out the four pages of instructions, and the only warnings it gave was ‘only lift with the handles.’”

A week before the supervisor gave her deposition, McDonald’s threw the broken iced tea container in the garbage. Two weeks after Perez gave her own deposition, she was fired. (McDonald’s said Perez lost her job because she did not have a Social Security number, but that confused Perez, who had worked there for a decade.)

Grantham says if he had to pick the key difference between the state-regulated workers’ comp and non-subscription plans like the one McDonald’s has, it’s this: “Hurt at work is workers’ comp. ‘Did something wrong. Caused injury’ — that’s non-subscription.”

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