IN THE

TENTH COURT OF APPEALS

No. 10-09-00046-CV

CHARLES OSBORN, M.D., D.C.,

D/B/A QUEST HEALTH & REHABILITATION,

Appellants

v.

ACE AMERICAN INSURANCE COMPANY,

Appellee

From the County Court at Law No. 1

Ellis County, Texas

Trial Court No. 08-C-3184

MEMORANDUM OPINION

After treating Wanda Johnson, a worker‖s compensation claimant, Dr. Charles 

Osborn sued Ace American Insurance Company, the carrier for Johnson‖s employer, for 

approximately $22,000 when Ace disputed and refused to pay Dr. Osborn‖s bills. Ace 

filed a plea to the jurisdiction, asserting that the trial court lacked jurisdiction because 

Dr. Osborn had failed to exhaust his administrative remedies. Both parties filed 

evidence and briefing on the jurisdictional question.

After a hearing on the plea, the parties filed further briefing and evidence, and 
Osborn v. Ace American Page 2

the trial court held another hearing. The trial court granted the plea to the jurisdiction 

in a detailed order. Dr. Osborn filed a motion for rehearing and more evidence, and the

trial court held another hearing, after which it entered another detailed order that 

granted the plea and dismissed the case without prejudice. Dr. Osborn appeals.

Dr. Osborn‖s three issues are: (1) Did Ace conclusively establish that the trial 

court did not have jurisdiction over Dr. Osborn‖s claims? (2) Did the trial court fail to 

consider all of the possible bases for supporting its exercise of jurisdiction? (3) Is the 

trial court‖s dismissal ruling supported by the law and the evidence?

Subject-matter jurisdiction is essential to the authority of a court to 

decide a case. ... A plea to the jurisdiction is the vehicle by which a party 

contests the trial court‖s authority to determine the subject matter of a 

cause. Whether a trial court has subject-matter jurisdiction over a cause is 

a question of law and is reviewed de novo.

Cornyn v. County of Hill, 10 S.W.3d 424, 426-27 (Tex. App.—Waco 2000, no pet.)

(citations omitted); see also Stinson v. Ins. Co. of State of Pa., 286 S.W.3d 77, 83 (Tex. 

App.—Houston [14th Dist.] 2009, pet. denied).

The plaintiff has the burden to allege facts affirmatively demonstrating 

that the trial court has subject matter jurisdiction. Tex. Ass’n of Bus. v. Tex. 

Air Control Bd., 852 S.W.2d 440, 446 (Tex. 1993). Dismissing a cause of 

action for lack of subject-matter jurisdiction is proper only when it is 

impossible for the plaintiff‖s petition to confer jurisdiction on the trial 

court. Freeman v. Wirecut E.D.M., Inc., 159 S.W.3d 721, 727 (Tex. App.—

Dallas 2005, no pet.).

When the legislature grants an administrative body the sole 

authority to make an initial determination in a dispute, the agency has 

exclusive jurisdiction over the dispute. Thomas v. Long, 207 S.W.3d 334, 

340 (Tex. 2006). If an administrative body has exclusive jurisdiction, a 

party must exhaust all administrative remedies before seeking judicial 

review of the decision. Id. Until the party has satisfied this exhaustion 

requirement, the trial court lacks subject matter jurisdiction and must 
Osborn v. Ace American Page 3

dismiss those claims without prejudice to refiling. Id.

Through the workers‖ compensation statutory scheme, the 

legislature has given a health care provider the right to a review when the 

provider has rendered a medical service but has been paid a reduced 

amount for that service. Tex. Lab. Code Ann. § 413.031(a)(1) (Vernon 

2006). By granting the Division the sole authority to make an initial 

determination of a medical fee dispute, the Legislature has given the 

Division exclusive jurisdiction over such a dispute. See Thomas, 207 

S.W.3d at 340; see also Howell v. Tex. Workers’ Compensation Comm’n, 143 

S.W.3d 416, 435 (Tex. App.—Austin 2004, pet. denied).

HealthSouth Med. Ctr. v. Employers Ins. Co. of Wausau, 232 S.W.3d 828, 830-31 (Tex. 

App.—Dallas 2007, pet. denied); see also Howell, 143 S.W.3d at 435-38.

When a plea to the jurisdiction challenges the existence of jurisdictional 

facts, we consider relevant evidence submitted by the parties. Id. (citing 

Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 555 (Tex. 2000)); see also Deese,

266 S.W.3d at 657. The standard of review for a jurisdictional plea based 

on evidence “―generally mirrors that of a summary judgment under Texas 

Rule of Civil Procedure 166a(c).‖‖‖ Deese, 266 S.W.3d at 657 (quoting 

Miranda, 133 S.W.3d at 228).

Stinson, 286 S.W.3d at 83.

The pleadings and evidence show that Ace was the workers‖ compensation 

carrier for Johnson‖s employer, National Envelope Corporation. The Division of 

Workers‖ Compensation ordered that Johnson was entitled to medical benefits for her 

compensable injury. “Coventry Workers‖ Comp Services,” which Ace had contracted 

with, preauthorized Dr. Osborn‖s treatment of Johnson. Ace refused to pay for almost 

all of Dr. Osborn‖s treatment, contending that it was not causally related to the 

compensable injury. The record is not well-developed, but Johnson‖s compensable 

injury included cervical and lumbar sprains/strains and lumbar disc bulges and that 

the disputed treatment consisted of Dr. Osborn‖s treatment following Johnson‖s lumbar 
Osborn v. Ace American Page 4

laminectomy.1 Ace‖s position was that, while perhaps that treatment was medically 

necessary to treat Johnson‖s condition, it was not reasonable and medically necessary to 

treat her compensable injury.

After requesting reconsideration, Dr. Osborn sued Ace. Ace‖s principal 

contention in the trial court was that Dr. Osborn failed to exhaust his administrative 

remedies because he was required, but failed, to pursue administrative medical dispute 

resolution of a fee dispute. Ace initially presumed—and considered it undisputed—

that Dr. Osborn had provided non-network care to Johnson.2 After Ace had filed its 

plea to the jurisdiction, Dr. Osborn amended his petition, but he did not plead that he 

had exhausted his administrative remedies, nor did he plead any facts relating to his 

provision of network health care or that he was a member of a certified workers‖ 

compensation health care network.

It was undisputed that Dr. Osborn did not seek medical dispute resolution (he 

admitted so in an interrogatory answer); thus, the threshold question before the trial 

court, and now before us, is whether Dr. Osborn was required to exhaust administrative 

remedies by seeking medical dispute resolution. See TEX. ADMIN. CODE §§ 133.305, 

133.307; see also TEX. LAB. CODE ANN. § 413.031 (Vernon Supp. 2010). In the hearings 

 

1 Specifically, Ace‖s notice of disputed issue(s) and refusal to pay benefits states in part: “We are 

disputing entitlement of extent of injury because: treatment and surgical procedure of lumbar 

laminectomy at L4-5/L5-S1 is not causally related to this Workers‖ Compensation injury which is limited 

only to a cervical sprain/strain, left knee contusion, lumbar sprain/strain, and lumbar disc bulges at L1-2, 

L2-3, L4-5, L5-S1 as per CCH Decision & Order.”

2 Ace also argued that even if Dr. Osborn were to prevail in his position that he provided network care, he 

was still required to exhaust administrative remedies because his bills were subject to retrospective 

review. See generally TEX. INS. CODE ANN. §§ 1305.351 - .355 (Vernon 2009 & Supp. 2010); TEX. ADMIN.

CODE §§ 10.102 - .104. Given our disposition, we need not address this argument.
Osborn v. Ace American Page 5

and in the trial-court briefing, the trial court and the parties narrowed that question to 

whether Dr. Osborn provided certified workers‖ compensation network health care or 

non-network health care.3

Subsection 1305.004(a)(16) of Chapter 1305 of the Insurance Code, known as the 

Workers‖ Compensation Health Care Network Act, defines “network” or “workers‖ 

compensation health care network” as an organization that is:

(A) formed as a health care provider network to provide health care 

services to injured employees;

(B) certified in accordance with this chapter and commissioner rules; and

(C) established by, or operates under contract with, an insurance carrier.

TEX. INS. CODE ANN. § 1305.004(a)(16) (Vernon Supp. 2010) (emphases added).

Under Rule 133.305, health care is either certified network health care or nonnetwork health care, defined as:

(5) Network health care--Health care delivered or arranged by a certified

workers‖ compensation health care network, including authorized out-ofnetwork care, as defined in Insurance Code Chapter 1305 and related 

rules. 

(6) Non-network health care--Health care not delivered or arranged by a 

certified workers‖ compensation health care network as defined in 

Insurance Code Chapter 1305 and related rules. “Non-network health 

care” includes health care delivered pursuant to Labor Code § 413.011(d1) and § 413.0115.

TEX. ADMIN. CODE § 133.305(5), (6) (emphases added).

 

3 We cannot dispute the trial court‖s following observation in its order on rehearing:

It is the position of the Trial Court that the complexity and confusion of the Texas 

Workers‖ Compensation system is, in great part, the basis for the confusion and opposing 

positions of the parties, this due to the series of administrative and bureaucratic 

labyrinths through which the parties are forced to navigate (specifically the Plaintiff, who 

though having provided valuable and effective healthcare services to the injured worker, has yet to 

be compensated for said services).
Osborn v. Ace American Page 6

Both sides presented evidence on the network versus non-network issue. Ace 

filed the affidavit of Renee Scott, which states:

I work for Ace American Insurance Company. My title is that of 

Medical Programs Coordinator and I have held that position since 

February 2006. One of my duties as the Medical Programs Coordinator is 

to serve as a liaison between the carrier, third party administrator, and the 

health care network.

Ace American Insurance Company has contracted with health care 

networks for injuries covered by the Texas Workers‖ Compensation Act. 

The only health care network that could pertain to the compensable injury 

of Wanda Johnson is Coventry Health Care Workers Compensation, Inc. 

d/b/a Coventry Workers‖ Comp Network. Coventry Workers‖ Comp 

Network is certified by the Division of Workers‖ Compensation to operate 

as a health care network. I have attached to this affidavit a document 

printed from the Texas Department of Insurance‖s website showing the 

name of the health care network, its certificate number 6087, and its date 

of certification on May 31, 2007.

I am aware that the Plaintiff in this lawsuit is Charles Osborn, M.D., 

D.C. d/b/a Quest Health & Rehabilitation as reflected in the style of the 

case set out above. I have personally investigated whether Dr. Osborn or 

Quest Health & Rehabilitation has a contract with or is otherwise 

employed by Coventry Workers‖ Comp Network. Based on my 

investigation, I can state that neither Dr. Osborn nor Quest Health & 

Rehabilitation have a contract or are otherwise employed by Coventry 

Workers‖ Comp Network. In other words, they are not member doctors of 

the health care network utilized by Ace American Insurance Company. 

Even though it does not apply, I have also confirmed in my investigation 

that Dr. Osborn nor Quest Health & Rehabilitation do not have a contract 

with and are not employed by Intracorp/Lockheed Martin Aero 

Employee Select Network, which is the only other health care network in 

which Ace American Insurance Company has a contract.

I have also investigated whether National Envelope, the employer 

of Wanda Johnson who is the injured employee, has elected to receive 

workers‖ compensation health care services for its injured employees. 

Based on my investigation, I can state that National Envelope has not 

made such an election, and, as a result, Wanda Johnson does not receive 

health care for her compensable injury of July 5, 2005 through the 

Coventry Workers‖ Comp Network. All health care received by Ms. 
Osborn v. Ace American Page 7

Johnson for her workers‖ compensation injury would be non-network 

health care.

It is my understanding that Dr. Osborn alleges that he has provided 

health care to Wanda Johnson through a health care network. It is my 

understanding that Dr. Osborn does have a contract for a broad based 

network, such as a preferred provider organization, but he does not have 

a contract with and is not an employee of the Coventry Workers‖ Comp 

Network. If Dr. Osborn does maintain that he is in that health care 

network, he would have a contract to that effect as required by the Texas 

Insurance Code.

Dr. Osborn filed a supplemental affidavit; one sentence conclusorily states that 

he provides “healthcare services within the network of Focus WC Bridge, a certified 

workers‖ compensation network.” With his motion for rehearing (in which he tacitly 

admitted that he did not have a contract with Coventry), Dr. Osborn filed this 

additional evidence:

A form letter to him from “Coventry/FOCUS,” which states: “You are receiving 

this letter because Coventry Healthcare Services and FOCUS Healthcare 

management send patients to you by virtue of your contractual commitment 

with Beech Street to provide health care services to patients who have a job 

related illness or injury.”

A form letter to him from FOCUS Healthcare Management stating that “FOCUS 

Healthcare Management, Inc. accesses your services through a business 

relationship and contract with: Beech Street.”

An “Explanation of Review,” apparently from Ace (or from ESIS, its apparent 

administrator) relating to the one charge that Ace did pay Dr. Osborn for. It 

references the network as “FOCUS WC BRIDGE” and the network plan as 

“FOCUS/BEECH STREET.” For the $70.00 charge, it references a “network 

reduction” of $14.00 with the explanation of “network import re-pricing –

contracted provider.”

In the context of this case and the record evidence, Dr. Osborn‖s one-sentence 

statement that Focus WC Bridge is a “certified workers‖ compensation network” is 
Osborn v. Ace American Page 8

conclusory. See Willis v. Nucor Corp., 282 S.W.3d 536, 548 (Tex. App.—Waco 2008, no 

pet.) (“‖A conclusory statement is one that does not provide the underlying facts to 

support the conclusion. ... A conclusory statement may set forth an unsupported legal 

conclusion or an unsupported factual conclusion.‖”). Conclusory evidence is not 

competent and, as such, is no evidence and does not raise a fact issue. See Schindler v. 

Baumann, 272 S.W.3d 793, 796 (Tex. App.—Dallas 2008, no pet.); see also Texas DivisionTranter, Inc. v. Carrozza, 876 S.W.2d 312, 314 (Tex. 1994); Davis v. Dillard’s Dep’t Store, 

Inc., No. 11-06-00027-CV, 2008 WL 1903794, at *2 (Tex. App.—Eastland May 1, 2008, no 

pet.).

Furthermore, Ace points out that Dr. Osborn (1) did not present evidence that

Focus WC Bridge was a “certified workers‖ compensation health care network,” as that 

term is used in the Workers‖ Compensation Act and the Insurance Code; (2) did not 

present evidence that the network reduction and network import re-pricing were for 

“network health care” pursuant to a certified workers‖ compensation health care 

network; and (3) did not present evidence that Beech Street was an approved “certified 

workers‖ compensation health care network.”

Ace argues that its evidence incontrovertibly established that Dr. Osborn was not 

in a certified workers‖ compensation health care network because Scott‖s affidavit 

showed that (1) Dr. Osborn did not have a contract with Coventry Workers‖ Comp 

Network, the only certified workers‖ compensation health care network pertinent to his 

care for Johnson; (2) Dr. Osborn was not a member doctor of the health care network 

used by Ace; (3) Johnson‖s employer had not elected to participate in a certified 
Osborn v. Ace American Page 9

workers‖ compensation health care network with Ace (see TEX. INS. CODE ANN. § 

1305.005(b) (Vernon 2009)); and (4) Dr. Osborn has a contract with a health-care 

network, but it is not with a certified workers‖ compensation health care network. Ace 

also notes that the Insurance Code requires a certified workers‖ compensation health 

care network to “enter into a written contract with each provider ... that participates in 

the network.” TEX. INS. CODE ANN. § 1305.152(a) (Vernon 2009). Dr. Osborn appears to 

have a contract with Beech Street, but there is no evidence of the nature of Beech Street‖s 

network.

Once Ace presented sufficient evidence conclusively establishing that Dr. Osborn 

did not provide health care for Johnson within a certified workers‖ compensation health 

care network, the burden of proof shifted to Dr. Osborn to present evidence sufficient to 

raise a fact issue. See Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995). He 

presented evidence that he provided health care to Johnson within a network of some 

type, but he did not present evidence that he provided health care to Johnson within a

statutorily defined and unique certified workers‖ compensation health care network. 

Based on our review of the evidence and applicable law, we hold that the trial court did 

not err in sustaining Ace‖s plea to the jurisdiction because Dr. Osborn has not exhausted 

his administrative remedies.4 See, e.g., Centre for Neuro Skills, Inc.-Texas v. Association 

Cas. Ins. Co., No. 05-06-00719-CV, 2007 WL 2380168, at *2 (Tex. App.—Dallas Aug. 22, 

2007, pet. denied). We overrule issues one and three.

 

4 Ace took the position in the trial court that, despite the passing of time and upon dismissal of the case, 

the applicable administrative rules allow Dr. Osborn an opportunity to pursue his administrative 

remedies because Ace disputed the extent of injury.
Osborn v. Ace American Page 10

Dr. Osborn‖s second issue asserts that his suit was proper because his right to 

payment was subject to the Division‖s “Decision and Order” and he thus had a right to 

sue when Ace did not comply with that order by refusing to pay his bills. See TEX. LAB.

CODE ANN. § 410.208(b) (Vernon 2006). The Order provides that Johnson “sustained a 

compensable cervical sprain/strain, lumbar sprain/strain, lumbar disc bulges at L1/2, 

L2/3, L4/5, and L5/S1, and left knee contusion injury in the course and scope of 

employment... .” It further states that Johnson “remains entitled to medical benefits for 

the compensable injury in accordance with TEXAS LABOR CODE §408.021.”

Subsection 408.021(a) states in part: “An employee who sustains a compensable 

injury is entitled to all health care reasonably required by the nature of the injury as and 

when needed.” TEX. LAB. CODE ANN. § 408.021(a) (Vernon 2006). We agree with Ace‖s 

assertion that this statute does not state that any treatment designated as related to the 

compensable injury must be automatically reimbursed by the carrier. Instead, the 

health care that the employee is entitled to must be “reasonably required” by the nature 

of the compensable injury, and that is apparently what the entire dispute between the 

parties is over: Ace has refused to pay for almost all of Dr. Osborn‖s treatment, 

contending that it was not causally related to Johnson‖s compensable injury. And as we 

have just held, that dispute must first be exhausted administratively. Accordingly, we 

overrule issue two.

Having overruled Dr. Osborn‖s three issues, we affirm the trial court‖s dismissal 

without prejudice of this cause. See Thomas v. Long, 207 S.W.3d 334, 340 (Tex. 2006) (“If 

an administrative body has exclusive jurisdiction, a party must exhaust all 
Osborn v. Ace American Page 11

administrative remedies before seeking judicial review of the decision. Until the party 

has satisfied this exhaustion requirement, the trial court lacks subject matter jurisdiction 

and must dismiss those claims without prejudice to refiling.”).

REX D. DAVIS

Justice

Before Chief Justice Gray,

Justice Davis, and 

Justice Scoggins

Affirmed

Opinion delivered and filed September 14, 2011

[CV06]