Effe ctive September 1, 2005, the leg islature dissolved the Texas Workers’ Compensation 1 Commi ssion and cre ated the D ivision of Workers’ Compensation within the Texas Depa rtment of I nsuranc e. Ac t of J une 1, 2005, 79th L eg ., R.S., ch. 265, § 8.001, 2005 Tex. Gen. L aws 469, 607. For convenie nce, w e will ref er to the a g ency

as the Division. Lumbermens Mutual Casualty Company was the pla intiff in the trial court, a nd the other 2 car riers inter vened. 

### TEXA S C OU R T OF A PPEAL S, THIR D DIST R ICT , AT AU STIN

NO. 03-0 5 -00 785 -CV

Texas Depart m ent of In surance, Division of Workers’ Com pensation, f orm erly know n as Te xa s W or ke r s’ Co m pe nsa ti on C om m iss ion , A ppe lla nt

v. Lumber m ens Mutual Casual ty Com pany; Pe trole um Casualty Com pany; S tate Of fi ce of Ri sk M ana ge m e nt ; I nt e r nat ion al P ape r , Se lf- Ins ur e d; Da lla s F ir e Ins ur anc e Co m panyand Harrison County , Texas, Appellees

F ROM THE DISTRICT CO URT OF TRAVIS COUNTY , 200TH JUDICIAL DISTRICT NO. GN40164 3 , HO NORAB LE DARLENE BY RNE , JUDGE PRESIDI NG

O P I N I O N Texas Depar

tment of I nsuranc e, Division of Worke rs’ Compensation (the D ivision) 1 appea ls from an orde r, ente red b y the trial cour t in a decla

ratory judgme nt action broug ht by Lumb e rm e ns Mu tua l Ca su a lty Com pa ny , P etr ol e um C a su a lty

Com pa ny , St a te Of

fi c e of Ris k Mana g e me nt, I nte rn a tio na l Pa pe r C omp any , D a lla s F ir e I ns ur anc e Com pa ny , an d H arr iso n Co un ty (collec tively , the ca

rrier s), decla

ring that the issuance of two advisorie s by the Division constituted 2

an inv a lid a tte mpt a t a d ho c ru le makin g and that a pp lic a tio n o f t

he a dv iso ri e s is an u ltr a

vir e s a c t,2

and enjoining the Division fr om f urther application and enfor ceme nt of the advisories. The Division argues that the trial c ourt lacke d subject matter juri s d i ction, and that eve n if the cour t had jurisdiction, the advisories ar e not rules an d i s s u ing a nd applying the m is withi n the Division’s statutory authority . We affir

m the trial court’ s judgme nt.

BACK GR OUND The Division a dminist ers the Texas Worke rs’ Compensation A ct. Under the Act, a n injured worke r may

become entitled to rec eive impairme nt income bene fits, which ar e base d on an imp a ir me nt r a tin g a ssi g ne d b y

a ph y sic ian. Te x. L a

b. Cod e Ann. § 4 08 .1 21 (We st 2 00 6) . A lso , if

an in ju red wor ke r i s a ssi g ne d a n im pa ir me nt r a tin g of

fi ft e e n p e rc e nt o r h ig he r, sh e may be c ome elig ible for suppleme ntal incom e b en efits after the e x piration of impairment income benef its. Id. § 408.142 (West 2006).

The Division is require d to use the Guides t o the Evaluation of Permane nt Impairment , published by the Amer ican Me dical Association (AMA), in dete rmining the exis tence and deg ree of an injure d wo rk er’s permane nt impairment. Id. § 408.124 (West 2006). The leg islature g rante d the Division discretion to adopt the four th edition of the Guides , id. § 408.124(c) , which it did on J une 7, 2000, af ter public notice and comment. See 28 Tex. Admin. Code § 130.1(c) ( 2 0 0 6 )

. T h e f

o u rth e d it io n of the Guides m u st be used for impairment rating s issued on or af ter October 15, 2001. Id. § 130.1(c) (2)( B) (I ). The princ ipal methodology found i n t h e fourth edition of the Guides is its i njury mod e l, w hic h u se s o bje c tiv e ly ve ri fi a ble e vid e nc e to p la c e patie nt s in to on e of e ig ht d ia g no sis

related estimate (D RE) categ ories. The dispute in this case conc erns the pr oper standa rd for3

a sse ssi ngthe DR E IV c ate g or y fo r the lum

bo sa c ra l sp ine in t

he c on te xt of

sp ina l f us ion surg e ri e s. The Gu ide

s re qu ir e s e ith e r los s of mot ion se g me nt int e g ri ty or a str uc tur a l in c lus ion

fo r a patie nt t o be g iven a r ating of DRE I V for the lumbosacra l spine.

The Gu ide

s e x p l a i n s l o s s o f

m o t i o ns e g m e n ti n t e g r i t y: A motion seg ment of the spine is def ined as two adja cent ve rtebra e, an inter calated dis k, and the ve rt e br a l f

a c e t jo int s. L os s of moti on se g me nt o r s tr uc tur a l in te g ri ty

is define d as abnor

mal back- and-f

orth motion (translation) or a bnormal angular motion of a mot ion se g me nt w ithre sp e c t to an a dja c e nt m oti on se g me nt.

For a patient to be dia g nosed with loss of motion segment integ rity for the l u m b o s ac ra l spine, the Guides require s that flexion and ex tension roentg enog rams (x-ray s) taken befor e the spinal fusion surg ery establish translation of at l east five milli meters of one ver tebra on another or angular motion at a motion seg ment that is eleven de g ree s more than at an adjac ent motion segme nt. L oss of motion seg ment integ rity is fre quently treated by perf orming spinal fusion surg ery , which involves re moving the disk be t we en t wo vertebrae and fusingthose verte brae toge ther. I n some instances, more than one disk is remove d and more than two ver tebra e ar e fuse d toge ther. The structural i nclusions for the DRE IV categ ory for the lumbosac ral spine a re: “ (1) Gre ater than 50% compression of one ve rtebra l body without residual neur ologic compromise; [and] (2) mult il e v e l s p in e s e g me n t s tr u c tu r a l c o mp r o mi s e , a s w it

h f r a c tu r e s o r d is lo c a ti o n s , w it

h o ut residual ne urolog ic motor compromise.”

The Division’s Medica l Advisor, Dr. W illiam Nemeth, testified that instances whe re d o c t o r s p e r f

o r m e d s p i n a l f u s i o ns u r g e r i e s b u td i d

n o tt a k e p r e o p e r a t i v e f

l e x i o n an d e x t e n s i o nx - r a ys4

cre ated “a big hole in the sy stem,” beca use confusion exis ted in the medical c ommunity reg arding how to r ate those patients. B eca use of this confusion, Ne meth draf ted Advisory

2003-10, which w as iss ue d b y the Di vis ion ’s Exe c uti ve Di re c tor Ric ha rd Re y no lds on July 22 , 20 03 . N e me th a lso draf ted Advisory

2003-10B , which the e x ecutive dir ector issued on Fe bruar

y 24, 2004. The sec ond

a dv iso ry a dd e d a n a dd iti on a l se c tio n to the fi rs t. T he a dv iso ri e s atte mpt to e lim inate the “ bigho le in the sy stem” by providing an alter native standa

rd for assessing a DRE I V categ ory when ther e ar e

no pr e op e ra

tiv e x-r ay s. The c ontroversia l provision included in both advisories states that “[i] f pre operative

x -ra y s were not perfor

med, the rating may

be dete rmined using the following criter ia: . . . b. Multil evel f

usion meets the criteria for DRE Categ ory I V, Structural Inclusions, as this mult ilevel fusion is e quivalent to ‘ multil evel spine seg ment structura l c ompromise’ per DRE I V.” The advisories a lso state that a one- level fusion mee ts the criter ia for D RE I Ias a struc tural inclusion.

Nemeth e x plained at tria l that when two or more ver tebra e ar e fuse d toge ther, the motion segme nts above and below the fused ve rtebra e nec essar ily move more tha

n they did before the s urg ery beca

use of “compe nsatory motion.” “So by definition, at t hat poi nt, if y ou didn’t have loss of motion segment integ rity befor e surg ery , y ou have it af terwa rds,” he testified. The carr iers base their complaint about the a dvisories on the statement in the Guides that “[w]i th the I njury

Mod el , s u rg ery

to treat a

n impairment does not modify the orig inal impairment estimate, which r emains the same in spite of any chang es in signs or sy

mptoms t hat may fo llo w the surg e ry

and ir re sp e c tiv e of wh e the r the patie nt h a s a fa vo ra ble or un fa vo ra ble re sp on se to treatment.” The c arr iers’ expert witness, Dr. Marc Taylor, testified that under the injury model5

of th e fourth edition of the Guides , patients may only be rated in the DRE I V categ ory for the lumbosacra l spine beca

use of loss of motion seg ment integ rity or st ructura l inclusions cause d by the

u n d e r l yi n g i n

j u r y, n o tf o r c o n d i t i o n s c a

u s e d b y s u r g e r y o r o t h e r t r e a t m e n t f

o r t h e u n d e r l yi n g i n

j u r y. Th e c arr ie rs argue that th e a dv iso ri e s a llow do cto rs to p la c e inj ur e d w or ke rs in cate g ories DRE I V and DRE V w hen the Guides wo uld re qu ir e the m to b e pla c e d in DR E I Ior

DR E I I I , resulting in increa sed im p ai rm en t income bene fits. Also, beca use categ ory

DRE I I Ifor the lum bo sa c ra l sp ine tr ans la te s to a te n p e rc e nt i mpa ir

me nt r a tin g wh ile DR E IV t ra ns la te s to a

tw e nty perc ent impairment rating, the a dvisories allow some injured w ork er s to become e ligible f or supplemental income be nefits when the y would not be elig ible under the Guides

. Lumbermens Mutual Casua lty Company

filed suit a g ainst the Division seeking (1) judicial revie w of a Division decision i n a contested case hear ing apply ing the advisories and (2) a decla rat o ry judgme nt under the A dminist rative Proc edure Act (A PA), see Tex. Gov’t Code Ann. § 2001.038 (West 2000), and the Uniform De clar atory J udg ments Act (UD J A), see Tex. Ci v. Prac. & Re m. C od e Ann. § 3 7. 00 4 ( Wes t 19 97 ), that th e a dv iso ri e s are incon siste nt w ithDi vis ion ru le 130.1 and that their issuanc e and a pplication is outside the Division’s statutory authority . The trial court s ev ere d the suit for judicial re view of the contested c ase he aring , and the other car riers the n intervene d

in th e d e c la r a to r y ju d g me n t a c ti o n . A f

te r a tr ia l, th e d is tr ic t c o u rt e n te r e d ju d g ment decla ring that the issuance of the advisories wa s an invalid attempt at ad hoc rulemakingand that the application of the advisories is an ul t ra v ires ac t, and enjoining the Division from applying the

a dv iso ri e s. The Division appea ls from the dec laratory judgme nt, arguing that the trial cour t la c ke d s ub

je c t matte r juri sd ic tio n und e r b oth the APAand

the UD JA, a

nd that th e Di vis ion

is6

immune from suit beca

use of sove reig n immunit y . The Division c ontends that even if the court ha d juri sd ict ion , it s d e c isi on

wa s im pr op e r b e c a

us e the a dv iso ri e s are no t r ule s and a pp lyingthe m is within the Division’s statutory authority beca use the a dvisories are consistent with the Guides

.
DI SCU SSIO N Sub jec t Mat terJurisdi ction

I n its second issue, the Division argues t hat t he trial c ourt lacke d jurisdiction under the UDJA. The Division contends that bec ause the car riers may seek judicial revie w of c ontested

ca s e hea ring s where the Division has applied the a dvisories, see T e x. L a b

. Co d e A n n. § 410.251 (W es t2 0 0 6 ), t h e U DJ A d o es n o tco n fe r j u ri s d i ct i o nt o re v i ew t h e d ec i s i o n s i nt h o s e s am e h ea ri n gs t h ro u gh a d ec l ar at o ry j u d gm en t ac t i o n . T h e Di v i s i o n fu rt h er as s er t s t h at t h e c arri er s d i d n o tal l ege a valid indepe ndent basis for jur isdiction under the UDJA.

A p l ai n t i ff who sue s the State must establish the State’s consent to suit. Te xas Natural Res. Conservation Comm’n v. IT-Dav y , 74 S.W .3 d 8 4 9 , 8 55 (Tex. 2002). Otherw ise,

sovere ign immuni ty from sui t defe ats a trial court’s subject matter jurisdiction. Id. Whether a tria l court ha s subject matter jurisdiction is a question of law we r eview de novo. Texas De p’t of Parks & W ildlif e v. M iranda , 133 S.W .3d 217, 226 (Tex. 20 0 4 ). I f jurisdiction was prope r under the UDJA, the suit was not barred by sovere ign immunity

. Se e Te x as Mu n. Po we r A ge nc

yv . P ub lic Ut il. Comm’n , 100 S.W .3d 510, 516 (Tex. App.—Austin 2003, pet. denied).

The UD J A does not conf

er jurisdiction on trial cour ts; rather, it is mere ly

a proc edura l device for deciding case s alre ady within a court’s jurisdiction. State v. Morales , 869 S.W .2d 941, 947 (Tex. 1 9 9 4 )

. Wh e n a s tatute p r o v id e s a s p e c if ic me th o d f

o r a tt a c k in g an a g e n c y o r d e r, a7

decla ratory judgme nt action direc ted at that ord er will not li e. Y oung Chevrolet v. Tex as Motor Vehicle Bd. , 974 S.W .2d 906, 911 (Tex. App.—Austin 1998, pet. denied).

The Division argues t hat because the car riers are permitted to seek judicial review of hear ing decisions applying the advisories under sec tion 410.251 of the labor c ode, they are barr ed from bring ing de clar atory judgme nt a ctions under the UDJA c halleng ing the same decisions. The Division asserts t h at beca use the languag e of the advisories is per missive, they

may not be

c ha lle ng e d a s r

ule s in su its fo r d e c larator

y jud g me nt. Th e Di vis ion ins ist s that if so me of its a pp e a ls pa ne ls h a ve he ld t

he a dv iso ri e s to be mand a tor y , the imp ro pe r a

pp lic a tio n o f t

he a dv iso ri e s c an o nly be c ha lle ng e d in

su its fo r j ud ic ia l r e vie w o f t ho se sp e c if

ic c on te ste d c a se he ari ng s. The Division misconstrues the ca rrier s’ pos ition. Whil e the car riers do object to t he appea ls panels’ holding s reg ardingthe advisories, the car riers a lso complain of the issuance of the advisories. The car

riers contend that the f

ourth edition of the Guides is the only permissible source for de termining impairment rating s in Texas. Tex

. L ab. C ode Ann. § 408.124; 28 Tex. Admin. C ode § 1 30 .1 (c ); Te

x as W or k e rs’ Com p. Com m’n v . G ar c ia , 893 S.W .2d 504, 526 (Tex. 1995) (discussing worke rs’ c ompensation laws in other state s and concludingthat “[o] ur Ac t, however , does not allow such flexibili ty , as it specific ally require s all determinations of impairme nt to b e made under the Guides ”). The car

riers asser t that beca use the a dvisories allow doctors to take spinal fusion surg erie s into account whe n assig ning impair ment rating s, and bec ause the fourth edition of the Guides

e xpre ssl y fo rb ids takin g surg e ry int o ac c ount wh e n de te rm ini ng imp a ir me nt usi ng the inj ur

y mod e l, t h e ad v i s ories ar e inconsistent with the Guides an d th u s th e ir is s u an c e w a s o u ts id e th e D iv is ion’ s authority . The c arr iers’ a

rg ument does not rest on the a dvisories being mandatory , but rather has the same for ce w hether the advisories allow consideration of surge ry or require it. Be cause the ca rrier s8

ch a ll e n g e th e is s u an c e o f th e a d v is o r ie s , w e r e je c t th e D iv is io n ’ s ar g u me n t th a t th e a v a il a b il ity of jud ic ia l re vie w of c on te ste d c a se he ari ng s un de r s e c tio n 4 10 .2 51 of the la bo r c od e ba

rs the c arr ie rs ’ UDJA action. The Division a lso a rg ues that the car

riers did not alleg e a valid independe nt basis for jurisdiction to support their UDJ A suit. Howeve r, as this Court has held, a UDJA action “to interpre t the scope of an ag ency ’s statutory authority

. . . is sufficient to invoke the tria l court’s jurisdiction and to waive sovere ign immunity .” Texas Mun. Power Age ncy v. Public Util. Comm’n , 100 S.W .3d 5 1 0 , 5 1 6 (T ex . Ap p . —

Au s t i n 2 0 0 3 , p et
. d en i ed ) ( ci t i n g Pu bli c Ut il. Com m’n v . Ci ty of A us tin , 728 S.W. 2d 90 7, 91 0- 11 (T e x. Ap p. —A us tin 19 87 , w ri t r e f’ d n .r .e .) ); se e als o Te x as De p’ t of Pu b. Sa fe ty

v . M oo re , 985 S.W .2d 149, 154 (Tex. App.—Austin 1998, no pet.). As discusse d above, the car riers argue that issuance of the a dvisories was outside the D ivision’s a uthority

. Acc ording ly , we hold that the trial cour

t had jurisdiction under the U DJ A and ove rrule the Division’s second issue. I n its first issue, the Div i s i on argues that the trial c ourt lacke d subject matter jur isd ic tio n und e r t

he APAbe c a

us e the a dv iso ri e s in que sti on are no t r ule s. Th e c arr ie rs br ou g ht s uit under both the A PA and the UDJA. The tr i al cour t held that it had subject matter jur isdiction, althoug h it did not specify on which basis. We need not a ddress whe ther the a dvisories are rules as define d in the APA beca

use we have he ld that the trial court ha d jurisdic t i o n o v er t he dec laratory judgme nt action pursuant to the UD J A.

Inv ali d Ad Hoc Rul e m aki ng and Ultra Vires Application

I n its t h ird and four

th issues, the Division contends that the trial cour t erre d by decla ring that the Divis i o n ’s i s s uance of the a dvisories constituted an invalid attempt at ad hoc9

rulemakingand that the application of the advisories is an ult ra vires act, and enjoining a ny further use of the a dvisories by

the Division. Firs t , the Division arg ues that the a dvisories in question could not be ad hoc rules beca use they are not rules within the definition i n t h e AP A. Ho wever, ad hoc “rule s” ar e, by definition, not rules. An ad hoc rule is an a g ency statement that interpr ets, implements, or presc ribes ag ency law or policy , but is not the product of for mal rulemakingproce dures unde r the APA. W est Tex. Util s. Co. v. Offi ce of Pub. Util. Counsel , 896 S.W .2d 261, 272 (Tex. App.—Austin 1995, no

wr it) ; Texas Ass’n of Long Distance Tel. Cos. v. Public Util. Comm’n , 7 9 8 S. W. 2 d 8 7 5 , 8 8 6 ( T e x. App.—Austin 1990, writ denied) . The Division admits in it s briefs a nd admitted at t ri al t hat the advisories we re not the pr oduct of f o rmal rulemaking pr ocedur es and that they interpre t law or po lic y . T he re fo re , th e tr ia l c ourt did no t e rr by de c lari ngthat th e a dv iso ri e s a re a d h oc ru le s. Next, the Divisi on argues t hat t he trial court erre d by decla ring that the advisories a

re invalid and that applying the m is an ultra vires act, a nd by enjoining the ir furthe r use. The Division insists that the advisories me rely interpre t the Guides and do not modify or contra dict the AMA’s methodology . The Division points to l ang uag e in the Guides stating that doctors’ judg m en t and experience must be used in assessing impairment rati n gs . T h e Division argues that compe tent doctors ofte n disag ree about how to assess impairme nt rating s, and t h at t h e advisories we re promulg ated to a ddress confusion that exis ted in the field and mere ly provide a sug g ested a

pproac h that doctors “ma

y wish to consider.” Dr . N e me th’ s te sti mony

ind ic a te d that the re wa s c on sid e ra ble c on fu sio n in

the fi e ld reg ar d in g a s s ig n in g im

p a ir me n t r a ti n g s to p a ti e n ts w h o h a d u n d e r g o n e s p in a l f

u s io ns u r g e r

y b ut lacke d preop er at i ve fle x ion and extension x -ra y s. I t is also arg uably

medically

sound to define10

structura l inclusions for the lumbosacra l spine to include spinal fusions; the fift h ed i t i o n o f t he Guides , not y et adopted in Te x as, takes t h i s ap p roac h. Whil e it is doubtless corre ct that medica l judgme nt and experienc e ar e nec essar y to assign impair

ment rating s to injure d worke rs, the Guides unambig uously

states that “[w]it h the I njury Model, surg ery to tr eat a n impairment does not modify the orig inal impairment estimate, which r emains the same in spite of any chang es in signs or sy mptoms t hat may

follow the surg ery

and irre spective of

whether the patient has a favor able or unfavor able r esponse to tre atment.” Thus, unde r the injury model of the Guides , doctors may not use their medic al judg ment or ex perie nce to take surge ry or t he effec t of surge ry into account whe n

a ssi g nin g imp a ir

me nt r a tin g s. B y iss uin g and a pp lyinga dv iso ri e s th a t a llo w d oc tor s to do jus t th a t, the Division has acte d outside its statutory authority beca use the four

th edition of the Guides is the only permissible source for de termining impa ir me nt r a ti n g s w it hin the Texas worker s’ compensation sy ste m. T e x. L a

b. Cod e Ann. § 4 08 .1 24 ; 28 Te x. Ad min . Co de § 1 30 .1 (c ); Texas W orkers’ Comp. Com m’n v. Ga rc ia , 8 93 S.W. 2d 50 4, 52 6 ( Te x. 19 95 ) ( dis c us sin g wo rk e rs ’ c omp e ns a tio n la ws in oth e r s ta te s and

c on c lud ingt

hat “ [o]ur Ac t, h ow e ve r, do e s n ot a llo w s uc h f le xibil ity , a s it

sp e c if ic a lly require s all determinations of impairme nt to be made unde r the Guides ”).

Although the curr ent statutory scheme may

war ra nt revision or ame ndment, the Division is not authorized to sug g est any alternative criter ia for de termining impairment rating s. Cf. Texas Alcoholic Bev erage Comm’n v. Amusement &Music Ope rators of T ex., I nc. , 997 S.W .2d 651, 658 (Tex. App.—Austin 1999, pet di sm’d w.o.j.) (“[T] he C ommissi on has adopte d g uidelines for enfor cing the Penal Code that a ppear contra ry to the plain wording of the statute.” ). The Div i s i o n m akes some arguments in its briefs sugg esting that the advisories contemplate use of the ra ng e-of -motion model, an alternat e methodolog y under the fourth edition11

of the Guides which permits taking surg ery into account in assig ning impair ment rating s. Howeve r, the a dv iso ri e s c le arl y

re fe r t o the inj ur

y mod e l, e ve n qu oti ng its de fi nit ion s of str uc tur a l in c lus ion s. F u rth e r mo r e , th e f

o u rth e d it io no f

th e Gu ides s t ates that the injury model is the pref

err ed

me tho do log y and that the ra ng e -o f- mot ion mod e l may on ly be re so rt e d to in or de r to diff e re nti a te betwee n two cate g ories sug g ested by the injury

model or if the injury

in question is not covered by the injury model. The a dvisories do not take e ither approa ch. We hold that be cause the advisories contra dict the fourth e dition of the Guides , and thu s co n t ra d i ct l abor c ode sec tion 408.124 and Division rule 130.1, the trial cour t did not err by decla

ring that their issuance was invalid and that their application is an ultra vires ac t, and enjoining their continued use

. CO NC LU SION Havingdisposed of all the Division’s points of err or, we aff irm the judg ment of the tr ia l c ourt
.

______________________________ Be a Ann Smith, J ustice Be fore J ustices B . A. Smith, P ember ton and Waldrop Affir med Filed: Oc tober 24, 2006