### IN THE TENTH COURT OF APPEALS
No. 10
- 09
- 00046
- CV CHARLES OSBORN, M.D. , D.C., D/B/A QUEST HEALTH & REHABILITATION , Appellant s v. ACE AMERICAN INSURAN CE COMPANY , Appellee

From the County Court at Law No. 1 Ellis County, Texas Trial Court No. 0 8
- 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. O sborn‖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 o n the jurisdictional question.
After a hearing on the plea, the parties filed further briefing and evidence, andOsborn 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 d id 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

- m atter 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

- m atter jurisdiction over a cause is a question o f 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.

— Ho uston [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 juri sdiction on the trial court. Freeman v. Wirecut E.D.M., Inc., 159 S.W.3d 721, 727 (Tex. A pp. — 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 j urisdiction over the dispute. Thomas v. Long, 207 S.W.3d 334, 340 (Tex. 2006). If an administrative body has e xclusive jurisdiction, a party must exhaust all administrative remedies before seeking judi cial review of the decision. Id. Until the party has satisfied this exhaustion requirement, the trial court lacks subject matter jurisdiction and mustOsborn v. Ace American Page 3

dismiss thos e claims wi thout 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 re duced amount fo r that service. T ex . L ab

. C ode A nn . § 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. denie d); 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 medica l benefits for her compensable injury

. “Coventry Workers‖ Comp Services ,” which Ace had contracted with, pre authorized Dr. Osborn‖s treatment of Johnson

. Ace refused to pay for almost all of Dr. Osborn‖s treatment, contending that it was not causally rel ated 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 lumbarOsborn 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 s ued Ace. Ace‖s principal
contenti on in the trial court was that Dr. Osborn failed to exhaust his administrative
remedies because he was required, but failed, to pursue a dministrative medical dispute resolution of a fee dispute . Ace initially presumed

— and considered it undisputed

—
t hat Dr. Osborn had provi ded 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 plea d 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 i n an interrogatory an swer) ; thus, the threshold question before the trial court, and now before us, is whether Dr. Osborn was required to exhaust administrative remedies by seek ing medical dispute resolution

. See T EX
. A DMIN
. C ODE § § 133.305 , 133.307 ; see also T EX
. L AB
. C ODE A NN
. § 413.031 (Vernon Supp. 2010)

. In the hearings

1 Specifically, Ace‖s notice of dispute d issue ( s ) and refusal to pay benefits states in part: “We are disputing entitlement of extent of injury because: treatment and surgical procedure of l umbar 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 T EX

. I NS

. C ODE A NN
. §§ 1305.351

- .355 (Vernon 2009 & Supp. 2010); T EX

. A DMIN
. C ODE §§ 10.102

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

and in the trial

- court briefing, t he 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
Sub section 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 net work to provide health care services to injured employees; (B) certified in accordance with this c hapter and commissioner rules; and (C) established by, or operates under contract with, an insurance carrier.
T EX
. I NS
. C ODE A NN
. § 1305.004(a)(16) (Vernon S upp. 2010) (emphase s added)

. Under Rule 133.305, health care is either certified network health care or non

network health care , defined as: (5) Network health care

-- Health care delivered or arranged by a certified workers‖ compensation health care networ k, including authorized out

- of

network 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 w orkers‖ 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(d

1) and § 413.0115.
T EX
. A DMIN
. C ODE § 133.305(5), (6) (emphase s added).

3 We cannot dis pute 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 throu gh 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 Prog rams 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. T he 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‖ Comp ensation 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 & Rehabi litation 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 N etwork. 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 h ave 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, th e 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 re sult, 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. Osbo rn filed a supplemental affidavit ; one sentence conclusorily stat es 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
admit ted that h e 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 patient s 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 referenc es 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 “ certifie d workers‖ compensation network” isOsborn 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. ‖”). C onclusory evidence is no t competent and , as such, is no evidence and d oes not raise a fact issue

. See Schindler v. Baumann, 272 S.W.3 d 793, 796 (Tex. App.

— Dallas 2008, no pet.) ; see also Texas Division

Tranter, Inc. v. Carrozza, 876 S.W.2d 312, 314 (Tex. 1994) ; Davis v. Dillard’s Dep’t Store, Inc., No. 11

- 0 6

- 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‖ Co mpensati on Act and the Insurance Code; (2) did not present evidenc e that the network reduction and network import re - pricing w ere 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

s howed 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 certifiedOsborn v. Ace American Page 9

workers‖ compensation health care network with Ace ( see T EX
. I NS
. C ODE A NN
. § 1305.005(b) (Vernon 2009)) ; and (4) Dr. Osborn ha s 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 w ritten contract with each provider ... that participates in
the network. ” T EX
. I NS
. C ODE A NN
. § 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
di d not provide health care for Johnson within a certified workers‖ compensation health

care network, the burden of proof shift ed to Dr. Osborn to present evidence sufficient to
raise a fact issue. See Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Te x. 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 c are network. Based on our review of the evidence and applicable law, we hold that the trial court did
not err in sustain ing Ace‖s plea to the jurisdiction because Dr. Osborn has not exhausted
his administrative remedies. 4 See, e.g., Centre for Neuro Skil ls, 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 t hat, 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
payme nt 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 T EX
. L AB
. C ODE A NN
. § 410.208(b) (Vernon 2006). The Order provides that Johnson “sustained a

co mpensable 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
th e 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. ” T EX
. L AB
. C ODE A NN
. § 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 th at 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 t hat 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 allOsborn 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 A ffirmed Opi nion delivered and filed September 14 , 2011 [CV06]