Quick Answer
Workers’ compensation can bar an injured refinery worker from suing their employer while allowing a claim against another responsible company. In a dispute following a $104 million refinery settlement, the Texas Supreme Court ordered further review of whether a contractor’s indemnity agreement required it to repay part of the settlement. The Oct. 9, 2026, decision did not decide the amount owed. This case highlights what happens when companies try to “pass the buck” — saving themselves money, and leaving those injured out to dry
When a refinery or industrial accident happens, fault is rarely placed on a single person or company. This process of determining how much each involved party was responsible for the injury or accident is called “fault distribution.” In many cases, that distributed fault can leave several companies pointing to the same workers’ compensation policy, safety contract or maintenance agreement. Those documents directly affect who an injured worker may sue, how fault is divided and which company is ultimately responsible for compensating the injured worker.
A recent Texas Supreme Court decision highlighted exactly those issues. The dispute involves Blanchard Refining Company, Marathon Petroleum and contractor Industrial Specialists after a fire at the Galveston Bay Refinery in Texas City. The fire resulted in the death of one worker, and at least 15 other workers (Blanchard Refining Company LLC and Marathon Petroleum Company LP v. Industrial Specialists LLC).
How were the workers injured?
Industrial Specialists attempted to perform “turnaround services” at the Galveston Bay Refinery when a fire in a regenerator vessel injured 15 of its employees and an employee of another contractor. One Industrial employee later died. Turnaround services are conducted whenever a refinery starts or stops production. It can be an extremely dangerous time to work because communication must be perfect between contractors, workers and plant operators.
The workers brought negligence claims against the refinery companies and other contractors. Industrial’s employees could not pursue ordinary negligence claims against their own employer because of workers’ compensation protections. Workers’ compensation agreements are strict contracts that cap the amount a company can be forced to pay after an accident, and usually prevent the worker from suing their employer.
The court’s earlier account of the litigation explains that the injury claims settled for $104 million. Blanchard’s share was $86 million. The refinery companies then sought repayment from Industrial under their service contract. Industrial Specialists blamed Blanchard for the accident, while the refinery companies attempted to recoup their losses from worker’s agreements with the contractors.
On Oct. 9, the Supreme Court vacated the appeals court’s judgment and returned the case to that court to consider a newer indemnity decision. It expressly declined to say which side should ultimately win.
Why workers’ compensation protected the employer
Texas workers’ compensation generally provides benefits for covered work injuries without requiring the employee to prove employer negligence. These benefits typically include medical, income, death and burial benefits, with eligibility and payment rules for each.
In exchange, Labor Code Section 408.001 generally makes those benefits the employee’s exclusive remedy against a covered employer for a work injury. “Exclusive remedy” is a legal term for “the only way you can get paid.” Even evidence that an employer made serious safety mistakes does not automatically create a negligence lawsuit against that employer.
The only exception for exemplary damages is when an employee’s death results from something called “gross negligence” or an intentional act or omission that resulted in the death. The statute reserves that claim for the surviving spouse or children. It does not create a general exception for every serious workplace injury.
However, Section 417.001 does allow a covered worker to pursue damages against a legally responsible third party while also seeking workers’ compensation benefits. This exception is why it is so important to work with a legal expert; knowing who can be responsible and who can be legally responsible are two key distinctions.
Our guide to workers’ compensation and workplace injury claims in Texas explains that distinction. At a refinery, a separate company’s maintenance, operating or safety work may support a third-party claim, depending on its duties, conduct and legal status.
How the jury divided responsibility
Industrial was designated a responsible third party in the underlying injury litigation. That does not mean they were necessarily liable.
That distinction matters when an employer has workers’ compensation immunity. A company may be evaluated for fault even though the employee cannot obtain an ordinary negligence judgment against it.
In the later contract trial, the jury assigned responsibility as follows:
| Company | Responsibility assigned |
|---|---|
| Marathon | 38% |
| Innovative Ventilation Systems | 22% |
| AltairStrickland | 18% |
| Industrial Specialists | 17% |
| Certified Safety | 5% |
The trial court awarded Marathon $46.48 million: its $86 million settlement payment minus $39.52 million, representing Marathon’s 38% share of the total settlement.
That award exceeded Industrial’s 17% share because the trial court’s approach excluded Marathon’s own negligence while allowing recovery for other parties’ negligence under the contract. The December 2025 appeals decision rejected the award on contract-enforceability grounds. The Supreme Court has now directed reconsideration, or forced the companies to go back to the drawing board.
Why an indemnity contract can change who pays
An indemnity agreement is a promise to cover specified losses or liabilities. Companies often include these promises in service contracts before work begins.
Workers’ compensation law addresses that possibility directly. Under Section 417.004, a covered employer generally does not owe a third party repayment for an employee’s injury judgment or settlement unless the employer executed a qualifying written agreement before the injury or death.
The employee’s negligence claim and the company’s contract claim therefore require separate analysis. Workers’ compensation may protect an employer from the first while a valid indemnity agreement creates exposure to the second.
Here, the contract excluded losses attributable to the refinery company’s own negligence. The dispute concerns what that language permits when the refinery company settles the injury claims and later seeks repayment.
Similar Texas cases explain the stakes for this case
S&B Engineers v. Scallon Controls: Settlement can preserve contractual indemnity
The decision prompting the remand was S&B Engineers & Constructors v. Scallon Controls, decided March 13, 2026. Seven workers fell while escaping a chemical fire-suppressant discharge at a refinery. After the injury claims settled, the litigation continued over a subcontractor’s proportional indemnity obligations.
The Supreme Court held that settlement does not automatically extinguish contractual indemnity rights. It distinguished those rights from contribution claims imposed by law.
The court also explained the express negligence doctrine: shifting a company’s own negligence requires specific contractual language. An agreement that clearly excludes that company’s negligence can avoid that problem.
Repayment still requires proof. Under the Scallon agreement, the settling parties had to establish a reasonable, good-faith settlement and the portion attributable to Scallon’s negligence. The court did not award them money.
The Blanchard contract uses different language. That is why the latest order calls for another review rather than automatically reinstating the $46.48 million award.
Entergy v. Summers: Another company may qualify as a statutory employer
In Entergy Gulf States v. Summers, a contractor’s employee was injured at Entergy’s plant. Entergy had provided workers’ compensation coverage through a written agreement with the contractor.
The Supreme Court held that Entergy qualified as a general contractor and statutory employer under the Act, allowing it to assert the exclusive-remedy defense.
For refinery workers, that means a facility owner may have protections beyond those suggested by the worker’s direct employment relationship. The written coverage arrangement and statutory requirements need review before treating the owner as a third party available for suit.
Wausau v. Wedel: Policy language can change reimbursement rights
In Wausau Underwriters v. Wedel, a truck driver injured while loading asphalt received workers’ compensation benefits and sued the terminal owner, Western Refining.
The workers’ compensation policy included a waiver of recovery rights against Western Refining. The Supreme Court held that the insurer could not bypass that waiver by seeking repayment from the worker’s settlement proceeds.
The case shows why insurance endorsements deserve attention alongside service contracts. A reimbursement demand depends on the applicable policy language and law.
How workers’ comp can affect settlement proceeds
Company-to-company indemnity and repayment of workers’ compensation benefits are different issues.
Under Section 417.002, the net recovery from a third-party claim generally reimburses the workers’ compensation carrier for benefits already paid. An excess recovery may also count as an advance against future benefits, including medical benefits.
Section 417.001 also provides for a reduction in the carrier’s subrogation interest tied to a court’s reduction of a judgment for employer responsibility. A fault percentage does not, by itself, establish an identical reduction in every settlement.
Before evaluating a settlement offer, the legal team should review benefits paid, any asserted reimbursement interest, applicable waivers and the effect on future benefits. Our article on what happens to settlement money after a Texas injury case explains why the gross settlement and the amount a client receives can differ.
What this means for Houston refinery workers
Our coverage of refinery accidents documents injuries involving maintenance work, fires and chemical releases. Evaluating a legal claim after those events requires identifying each company’s role.
A thorough review may include:
- Employment and coverage records: Who employed the worker, and who provided the workers’ compensation policy?
- Service contracts: Which companies agreed to perform, supervise or support the work?
- Safety evidence: What do permits, equipment records, operating logs and witness accounts show about the incident?
- Insurance documents: Are there relevant indemnity provisions, coverage arrangements or waivers of recovery rights?
- Settlement terms: Which claims are released, and which repayment issues remain?
As our recent article about the Chemical Safety Board’s refinery fire video explains, understanding a disaster’s causes and proving civil liability involve different questions. A legal team needs admissible evidence connecting the responsible parties’ conduct to the worker’s injuries.
Frequently asked questions
Can I receive workers’ comp and sue another company?
Yes, when a legally responsible third party caused or contributed to the injury. Workers’ compensation immunity, statutory-employer status and reimbursement rights can affect the claim.
Can an employer be assigned fault even if I cannot sue it?
Yes. An employer may be designated a responsible third party and evaluated for fault when Texas law’s requirements are met. That does not itself make the employer liable to the worker for damages.
Did the Supreme Court award refinery workers another $46.48 million?
No. That figure concerns the refinery companies’ effort to recover settlement costs from Industrial. The latest ruling sends the indemnity dispute back to the appeals court without deciding the outcome.
Does accepting workers’ comp mean the refinery owner is protected?
It depends on the owner’s legal status and coverage arrangement. A qualifying statutory employer may assert immunity. A separate company that lacks that protection may face a third-party claim.
Talk to a Houston refinery injury lawyer
Issues about liability can be complicated, confusing and especially aggravating to families just trying to pay their medical bills or get by without their loved one. The refinery fire at the Texas City refinery occurred over 10 years ago. That’s 10 years of uncertainty for individuals and families, while the responsible companies fight over who has to sign the check.
While The Law Offices of Hilda Sibrian does not handle claims involving Texas workers’ compensation, we do represent clients with third-party workplace injury claims. Hilda Sibrian has served the Houston metropolitan area for over 22 years, including Sugar Land, Missouri City, La Porte, Beaumont, Pasadena, The Woodlands, The Heights, Bellaire, Kingwood, Baytown and of course Houston proper.
If you or a family member suffered a serious injury after a refinery incident, our Houston refinery accident lawyers can review who may be legally responsible. Call 713-714-1414 or use our online contact form for a free consultation.
