Court Opinion

ID: 9377210
Source: CourtListenerOpinion
Date Created: 2023-03-07 11:08:05.843286+00
Date Added: 2024-06-11T17:17:12.591113
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

                                        NO. 03-21-00074-CV

 Appellant, Texas Department of Insurance, Division of Workers’ Compensation// Cross-
     Appellants, Accident Fund Insurance Company of America and Texas Cotton
                                    Ginners’ Trust

                                                   v.

  Appellees, Accident Fund Insurance Company of America and Texas Cotton Ginners’
           Trust// Cross-Appellee, Texas Department of Insurance, Division of
                                Workers’ Compensation

              FROM THE 53RD DISTRICT COURT OF TRAVIS COUNTY
NO. D-1-GN-18-000341, THE HONORABLE MAYA GUERRA GAMBLE, JUDGE PRESIDING

                              MEMORANDUM OPINION

               This declaratory-judgment action was brought pursuant to Section 2001.038 of the

Texas Government Code. Appellees and cross-appellants, Accident Fund Insurance Company of

America and Texas Cotton Ginners’ Trust, are two insurance carriers that successfully challenged

the validity and applicability of an agency rule regarding eligibility for workers’ compensation

supplemental income benefits (SIB), 28 Texas Administrative Code Section 130.102 (the Rule),

which adopted rules pursuant to Texas Labor Code Section 408.142 (the Statute). 28 Tex. Admin.

Code §130.102 (2009) (Tex. Dep’t of Ins., Div. of Workers’ Comp., Eligibility for Supplemental

Income Benefits; Amount). 1 The appellant and cross-appellee, the Department of Insurance,

       1   All citations to agency rules are to the current version.
Division of Workers’ Compensation (the Division) is the state agency designated to oversee the

workers’ compensation system and that promulgated the challenged rule.            Tex. Lab. Code

§ 402.001. The Division appeals the district court’s rulings that Section (d)(1)(D) of the Rule was

invalid and that Section (f)’s mention of “work search contacts” is inapplicable to individuals who

complete work searches on their own without the involvement of the Texas Workforce

Commission (TWC). In their cross-appeal, the carriers challenge various agency materials of the

Division as invalid ad hoc rules, which the district court ruled were not ad hoc rules. 2 Accident

Fund Insurance Company also challenges on cross-appeal, the district court granting the Division’s

motion to exclude Accident Fund’s expert witness. We will reverse in part and affirm in part the

district court’s order.

                                        BACKGROUND

                The Workers’ Compensation Act was enacted “to balance the competing interests

of providing ‘compensation for injured employees while protecting employers from the costs of

litigation.’” SeaBright Ins. v. Lopez, 465 S.W.3d 637, 642 (Tex. 2015). The system offers “four

levels of income benefits: 1) temporary income benefits; 2) impairment income benefits;

3) supplemental income benefits; and 4) lifetime benefits.” Texas Workers’ Comp. Comm’n

v. Garcia, 893 S.W.2d 504, 513 (Tex. 1995). At issue here, are the SIB. SIB are longer term

disability compensation that apply after temporary and impairment benefits have ceased, and the

injured employee has a remaining impairment rating of 15 percent or more and is unemployed or

        2  The Division argues that the carriers’ ad hoc rules challenge and excluded-witness
challenge are improperly before this Court because a party who does not file a notice of appeal
may not be granted more favorable relief than did the trial court except for just cause. See Tex. R.
App. P. 25.1. However, because the carriers filed timely notices of appeal, we reach the merits of
their cross-appeal issues.
                                                 2
underemployed. See Tex. Lab. Code § 408.142; Garcia, 893 S.W.2d at 513 (Tex. 1995). To be

eligible for quarterly SIB payments, an injured worker who meets all other requirements, must

“demonstrate an active effort to obtain employment,” by either participating in a vocational

rehabilitation program or completing the required “work search efforts” for the qualifying period.

Id. §408.142(a); 28 Tex. Admin. Code §130.102(d) (Eligibility for Supplemental Income Benefits;

Amount).

              Relevant here are the statutory requirements for satisfactory “work search efforts” to

receive SIB payments. Specifically, the parties dispute what the Statute requires of an injured

employee that is searching for work on their own—compared to through a vocational rehabilitation

program or through the TWC—to be entitled to SIB payments. The carriers are insurance

companies who provide coverage of SIB for employers of injured workers.               The Division

promulgated the challenged rule. See 28 Tex. Admin. Code § 130.102(d), (f) (Eligibility for

Supplemental Income Benefits; Amount).

              The Statute was amended during the 2005 legislative session, and the Section

relevant here currently reads:

       (a) The commissioner by rule shall adopt compliance standards for supplemental
       income benefit recipients that require each recipient to demonstrate an active effort
       to obtain employment. To be eligible to receive supplemental income benefits
       under this chapter, a recipient must provide evidence satisfactory to the division of:

               (1) active participation in a vocational rehabilitation program conducted by
               the Department of Assistive and Rehabilitative Services or a private
               vocational rehabilitation provider;

               (2) active participation in work search efforts conducted through the Texas
               Workforce Commission; or

                                                 3
                (3) active work search efforts documented by job applications submitted by
                the recipient.

        (b) In adopting rules under this section, the commissioner shall:

                (1) establish the level of activity that a recipient should have with the Texas
                Workforce Commission and the Department of Assistive and Rehabilitative
                Services;

                (2) define the number of job applications required to be submitted by a
                recipient to satisfy the work search requirements; and

                (3) consider factors affecting the availability of employment, including
                recognition of access to employment in rural areas, economic conditions,
                and other appropriate employment availability factors.

        (c) The commissioner may consult with the Texas Workforce Commission, the
        Department of Assistive and Rehabilitative Services, and other appropriate entities
        in adopting rules under this section.

Tex. Lab. Code §408.1415.

              In 2009 the Division amended the Rule, adding the new work-search-efforts standard

to the SIB-eligibility rules:

        (d) Work Search Requirements.

                (1) An injured employee demonstrates an active effort to obtain
                employment by meeting at least one or any combination of the following
                work search requirements each week during the entire qualifying period:

                        (A) has returned to work in a position which is commensurate with
                        the injured employee’s ability to work;

                                                  4
               (B) has actively participated in a vocational rehabilitation program
               as defined in § 130.101 of this title (relating to Definitions);

               (C) has actively participated in work search efforts conducted
               through the Texas Workforce Commission (TWC);

               (D) has performed active work search efforts documented by job
               applications; or

               (E) has been unable to perform any type of work in any capacity,
               has provided a narrative report from a doctor which specifically
               explains how the injury causes a total inability to work, and no other
               records show that the injured employee is able to return to work.

       (2) An injured employee who has not met at least one of the work search
       requirements in any week during the qualifying period is not entitled to SIBs
       unless the injured employee can demonstrate that he or she had reasonable
       grounds for failing to comply with the work search requirements under
       this section.

....

(f) Work Search Efforts. As provided in subsection (d)(1)(C) and (D) of this section
regarding active participation in work search efforts and active work search efforts,
an injured employee shall provide documentation sufficient to establish that he or
she has, each week during the qualifying period, made the minimum number of job
applications and or work search contacts consistent with the work search contacts
established by TWC which are required for unemployment compensation in the
injured employee's county of residence pursuant to the TWC Local Workforce
Development Board requirements. If the required number of work search contacts
changes during a qualifying period, the lesser number of work search contacts shall
be the required minimum number of contacts for that period. If residing out of
state, the minimum number of work search contacts required will be the number
required by the public employment service in accordance with applicable
unemployment compensation laws for the injured employee’s place of residence.

                                         5
28 Tex. Admin. Code § 130.102(d), (f) (Eligibility for Supplemental Income Benefits; Amount).

In the district court, the carriers sought a determination of the validity and applicability of the Rule

as well as alleged ad hoc rules on the same topic. All parties filed motions for summary judgment.

The carriers argued that the statute on its face limits the types of work-search efforts that may be

conducted by an injured worker to entitle them to receipt of SIB payments to three—and only

three—pathways: (1) active participation in a vocational rehabilitation program; (2) work-search

efforts through TWC; or (3) job applications submitted by the recipient. They further argued that

the discretion given to the Division in the Statute Section (b) is limited to determining the number

of actions required to satisfy eligibility and did not give the Division any discretion to modify the

three types of activity that may qualify.

              The carriers’ challenges to the Rule focused on the Rule Sections (d)(1)(D), and (f).

Specifically, the carriers argued that the Rule Section (d)(1)(D) is invalid because the exclusion of

“submitted by the recipient” from the end of “active work search efforts documented by job

applications” in the Rule compared to the Statute, allows for job seekers searching independently

outside of TWC to count any “work search contact,”—an umbrella term used by TWC to refer to

a list of activities that count towards eligibility for unemployment compensation benefits,—as a

“work search effort,” which is the term used in the Statute, without having to document with job

applications as the legislature intended to require. Compare 40 Tex. Admin. Code § 815.28(b)(4)

(2004) (Tex. Workforce Comm’n, Work Search Requirements), with Tex. Lab. Code

§ 408.1415(a)(3), and 28 Tex. Admin. Code § 130.102(d)(1)(D) (Eligibility for Supplemental

Income Benefits; Amount). They also argued that the Rule Section (f) authorizes activities other

than “job applications” to count as “work search efforts” by conflating “job applications” with the

broader term “work-search contacts” through the following Rule language: “made the minimum

                                                   6
number of job applications and or work search contacts consistent with the work search contacts

established by TWC.” 28 Tex. Admin. Code § 130.102(f) (Eligibility for Supplemental Income

Benefits; Amount).

              The Division argued that: (1) the statute when read as a whole does not limit

job-search activities to only three categories but rather gave the Division broad discretion to

consider various market factors in setting job-search criteria; and (2) the Division has the discretion

to define what a “job application” is and defining it as a “work search contact” under the definition

used by TWC is consistent with the Statute’s direction in Sections (b)(3), and (c), for the Division

to consider various factors in adopting rules under the statute through consultation with TWC.

The district court ordered:

       1. 28 Tex. Admin. Code §130.102(d)(1)(D) is invalid because it authorizes a fourth
       method of showing entitlement to Supplemental Income Benefits which conflicts
       with Labor Code §408.1415(a)(3);

       2. Defendant is permanently enjoined from applying this invalid rule.

       3. The language in 28 Tex. Admin. Code §130.102(f) pertaining to making “work
       search contacts” is not applicable to a claimant that is not participating in work
       search efforts through the Texas Workforce Commission; and

       4. Defendant is permanently enjoined from applying the language in 28 Tex.
       Admin. Code §130.102(f) pertaining to making “work search contacts” to a
       claimant that is not participating in work search efforts through the Texas
       Workforce Commission.

              The carriers also challenged the Division’s preamble to Rule 130.102, Appeals Panel

Decision 10029-s, the Division’s Appeals Panel Decision Manual, and the Application for

                                                  7
Supplemental Income Benefits as containing invalid ad hoc rules. Specifically, the carriers argued

that these materials contained ad hoc rules because they created a fourth pathway to receive SIB

payments in which an injured employee may complete a wider category of “work search contacts”

without being required to document those efforts with job applications. The Division argued that

these were not rules, but rather were restating or explaining a valid rule.

              The district court concluded that these materials were not ad hoc rules but rather part

of the Division’s “adjudicative duties.” The district court noted that the Division could no longer

rely on these materials to support decisions that conflict with its ruling and that the Division would

likely need to make revisions to the preamble, the manual, and the application.

              Additionally, the district court granted the Division’s motion to exclude Accident

Fund’s expert witness—which Accident Fund argues was an abuse of the district court’s

discretion. This appeal followed.

                                          DISCUSSION

              The Division alleges that the district court erred in ruling that the Rule Section

(d)(1)(D) is invalid and Subsection (f)’s “work search contact” language is not applicable to a

claimant not participating in work-search efforts through TWC. The carriers on cross-appeal

challenge the district court’s ruling that the challenged agency materials were not ad hoc rules.

Accident Fund also challenges on cross appeal the district court granting the Division’s motion to

exclude its expert witness.

VALIDITY AND APPLICABILITY OF RULE 130.102

              We review the district court’s summary-judgment rulings de novo.               Valence

Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). Statutory construction is a question

                                                  8
of law that we also review de novo. Johnson v. City of Fort Worth, 774 S.W.2d 653, 656 (Tex.

1989). We construe statutory provisions to ascertain and effectuate legislative intent. Texas Dep’t

of Protective & Regulatory Servs. v. Mega Child Care, Inc., 145 S.W.3d 170, 176 (Tex. 2004).

“To do this, we look to and rely on the plain meaning of a statute’s words as expressing legislative

intent unless a different meaning is supplied, is apparent from the context, or the plain meaning of

the words leads to absurd or nonsensical results.” Cadena Comercial USA Corp. v. Texas

Alcoholic Beverage Comm’n, 518 S.W.3d 318, 325 (Tex. 2017). When a statute’s language is

clear and unambiguous “the statute’s plain language most reliably reveals the legislature’s intent.”

Texas Health Presbyterian Hosp. of Denton v. D.A., 569 S.W.3d 126, 136 (Tex. 2018). Further,

we “read every word, phrase, and expression in a statute as if it were deliberately chosen, and

presume the words excluded from the statute are done so purposefully.” See Gables Realty Ltd.

P’ship v. Travis Cent. Appraisal Dist., 81 S.W.3d 869, 873 (Tex. App.—Austin 2002, pet. denied).

For facial challenges to a rule, we do not consider the merits of the rule on a case-by-case basis.

Mid-Century Ins. v. Texas Workers’ Comp. Comm’n, 187 S.W.3d 754, 758 (Tex. App.—Austin

2006, no pet.). “Rather, we consider whether the rule: (1) contravenes specific statutory language;

(2) runs counter to the general objectives of the statute; or (3) imposes additional burdens,

conditions, or restrictions in excess of or inconsistent with the relevant statutory provisions.” Id.

An agency’s construction of a statute that is within its area of expertise should be given serious

consideration as long as the construction is both reasonable and does not contradict the plain

language of the statute. Id. The parties challenging the rule have the burden of proving it is invalid.

Texas State Bd. of Exam’rs of Marriage & Family Therapists v. Texas Med. Ass’n, 511 S.W.3d

28, 33 (Tex. 2017).

                                                  9
VALIDITY OF RULE 130.102(D)(1)(D)

              The district court ruled that Section (d)(1)(D) of the Rule is invalid because “it

authorizes a fourth method of showing entitlement to Supplemental Income Benefits which

conflicts with Tex. Lab. Code §408.1415(a)(3).” The carriers argued below—and continue to

argue in support of the district court’s ruling—that the Statute authorizes three pathways of

showing eligibility for the work-search requirement for SIB payments: (1) active participation in

a vocational rehabilitation program under Section (a)(1); (2) active participation in work-search

efforts conducted through TWC under Section (a)(2); and (3) active work-search efforts

documented by job applications submitted by the recipient under Section (a)(3). They argue that

the Division has created a fourth way of qualifying for benefits by not requiring the submission of

any job applications but rather only requiring individuals searching on their own to make “work

search contacts.” They also argue that a “job application” is limited to a writing on paper or online

that conveys information to an employer about the individual. The carriers’ facial challenge to

Rule Section (d)(1)(D) alleges that the exclusion of the statutory language “submitted by the

recipient” from the Rule’s language following “active work search efforts documented by job

applications” authorizes this alleged fourth pathway.

              The Division argues on appeal that the carriers’ rule challenge is rooted in an overly

restrictive construction of Statute Section 408.1415(a)(3) and a disregard for the broad discretion

that the Statute vested in the Commissioner to create rules to implement the new work-search

compliance standards. Specifically, the Division argues that after consultation with TWC and

considering the appropriate employment availability factors as directed by Statute Sections (b)(3)

and (c), the amendments to the challenged Rule allow for injured workers to request and apply for

jobs in a variety of ways, including in person, over the phone, or submitting copies of written

                                                 10
physical or online forms, and documenting these applications for employment on the Application

for Supplemental Income Benefits. The Division argues that limiting “job applications” as

narrowly as the carriers’ definition would run counter to the general objectives of the statute

because it would exclude job markets in certain areas which do not typically require a formal

written form for applying for employment.

              As a state agency, the Division may only exercise powers that the Legislature confers

upon it in clear and express language and cannot exercise what amounts to a new or additional

power for the purpose of administrative expediency. Texas Nat. Res. Conservation Comm’n

v. Lakeshore Util. Co., 164 S.W.3d 368, 377 (Tex. 2005). This is because the Division is a creature

of the legislature with no inherent authority of its own. Id. However, “[w]hen the Legislature

expressly confers a power on an agency, it also impliedly intends that the agency have whatever

powers are reasonably necessary to fulfill its express functions or duties.” Id. at 378.

              The Division has been given the express power to oversee the workers’

compensation system. Tex. Lab. Code § 402.001. Regarding SIB eligibility under the “work

search efforts” standard, an independent job seeker must “provide evidence satisfactory to the

division of . . . active work search efforts documented by job applications submitted by the

recipient.” Id. § 408.1415(a)(3). Thus, the legislature conferred some power on the Division to

determine “satisfactory evidence.” Id. The legislature explicitly mandated that the Division adopt

rules that:

        (1) establish the level of activity that a recipient should have with the Texas
        Workforce Commission and the Department of Assistive and Rehabilitative
        Services;

                                                 11
       (2) define the number of job applications required to be submitted by a recipient to
       satisfy the work search requirements; and

       (3) consider factors affecting the availability of employment, including recognition
       of access to employment in rural areas, economic conditions, and other appropriate
       employment availability factors.

Id. § 408.1415(b). The Statute does not limit the Division’s rulemaking under the Statute to only

these three objectives, but it requires that the three objectives be met when the Division adopts

new rules under the Statute. Id. The Division is also expressly allowed but not required to consult

with the “Texas Workforce Commission, the Department of Assistive and Rehabilitative Services,

and other appropriate entities in adopting rules under this section.” Id. § 408.1415(c).

              Rule Section (d)(1)(D) tracks the language of Statute Section (a)(3), stating “active

work search efforts documented by job applications,” but does not include the words “submitted

by the recipient,” as does the Statute. Compare 28 Tex. Admin. Code § 130.102(d)(1)(D)

(Eligibility for Supplemental Income Benefits; Amount), with Tex. Lab. Code § 408.1415(a)(3).

We agree with the carriers that the statute unambiguously creates three categories of “work search

efforts” that an injured employee may engage in, in order to satisfy the “work search efforts”

requirement: (1) active participation in a vocational rehabilitation program; (2) work-search efforts

through TWC; or (3) work-search efforts done outside of TWC participation by an independent

job seeker that must be documented by job applications submitted by the recipient. Tex. Lab.

Code § 408.1415(a). The differing language used in Sections (a)(2) and (a)(3) unambiguously

demonstrates that the legislature set different standards for work-search efforts, depending on

whether they were done with or without the involvement of TWC. Thus, injured employees

                                                 12
completing job searches outside of a vocational rehabilitation program and TWC must document

their work-search efforts through job applications submitted by the applicant.

              The crux of the issue before us is whether the exclusion of “submitted by the

recipient” in Rule Section (d)(1)(D) creates a definition of “job application” that: (1) contravenes

the specific statutory language; (2) runs counter to the general objectives of the statute; or

(3) imposes additional burdens, conditions, or restrictions in excess of or inconsistent with the

relevant statutory provisions. See Mid-Century Ins., 187 S.W.3d at 758. For the following reasons,

we conclude it does not.

              To determine the validity of Rule Section (d)(1)(D), we first determine if the Rule

contravenes specific statutory language. See id. The carriers argue that as a compound word “job

application” means, “a letter or form containing details of your qualifications, skills, experience,

etc. that you send to an organization when you are applying for a job with them.” Job application,

Cambridge     Dictionary     (2023),   https://dictionary.cambridge.org/us/dictionary/english/job-

application. The Division argues that the words “job” and “application” have multiple meanings

that when considered as a whole define “job applications” as “any request for employment,

including requests made orally, either in person or over the phone.” Specifically, the Division

argues that “job” can mean “a regular, remunerative position;” “a specific role, duty, or function;”

and “something that has to be done:        a task.”   Job, Merriam-Webster Dictionary (2023),

www.merriam-webster.com/dictionary/job. The Division also argues that “application” can mean:

“a request, as for a job,” and “a written statement of one’s qualifications for employment or

admission,” The American Heritage Dictionary Of The English Language 63 (1981); “the act of

requesting;” “a written or spoken request or appeal for employment, admission, help, funds, etc.;”

“a form to be filled out by an applicant, as for a job or a driver’s license,” Dictionary.com,

                                                13
www.dictionary.com/browse/application; and (c) “the act of applying;” “request, petition;” and “a

form used in making a request,”              Application, Merriam-Webster Dictionary (2023),

www.merriam-webster.com/dictionary/application. These definitions help establish the outer

boundaries of what “job applications” could or could not mean. City of Fort Worth v. Pridgen,

653 S.W.3d 176, 183–84 (Tex. 2022) (quoting Philip A. Rubin, War of the Words: How Courts

Can Use Dictionaries in Accordance with Textualist Principles, 60 Duke L.J. 167, 191 (2010)

(“[D]ictionaries . . . should be used only to say what a word could mean, not what it must mean—

they can only establish outer boundaries.”)).

              The parties frame the validity challenge as relying on the correct meaning of the term

“job application.” However, because “job application” is a term used in the Statute, the definition

of “job application” is only relevant in this facial rule challenge to Section (d)(1)(D) to the extent

that the difference between excluding and including the modifying phrase, “submitted by the

recipient,” changes the common meaning of “job applications” or otherwise invalidates the statute

on its face. The common meaning of “submitted” is: “to present or propose to another for review,

consideration,    or    decision.”        Submitted,    Merriam-Webster        Dictionary     (2023),

https://www.merriam-webster.com/dictionary/submitted. Both sets of definitions provided by the

parties describe things that may be reviewed, considered, or decided upon. The exclusion of

“submitted” does not facially change the use of “job application” in the Rule. Neither party’s

definition of job application is made more or less valid by the inclusion or exclusion of the words

“submitted by the applicant.” The carriers have not shown that the Rule contravenes specific

statutory language. See Mid-Century Ins., 187 S.W.3d at 758.

              The carriers’ true complaint is that the Division is applying the Rule to situations in

which the documented evidence does not constitute a “job application.” However, fact-specific

                                                 14
applications of a rule to specific cases are not properly challenged through a facial rule challenge.

Id. (“In a facial challenge to a rule, we do not consider the merits of the Division’s rule on a

case-by-case basis.”). Whether the Rule is applicable, i.e., capable of being applied, to a specific

situation may be challenged in a Section 2001.038 rule challenge, but whether the Division is

correctly applying the Rule in a specific situation may not be challenged. Tex. Gov’t Code

§ 2001.038(a); LMV-AL Ventures, LLC v. Texas Dep’t of Aging & Disability Servs., 520 S.W.3d

113, 124 (Tex. App.—Austin 2017, pet. denied).            If, as the carriers argue, the Division’s

application of the Rule is incorrect because it allowed something other than “job applications” to

count as a “work search effort” for someone searching on their own, then that argument presents

an application challenge that does not contest the facial validity or applicability of the Rule itself.

Tex. Gov’t Code § 2001.038(a); LMV-AL Ventures, LLC, 520 S.W.3d at 124. No party argues that

the wrong rule is being applied to these situations, but rather that the Rule is being applied

incorrectly in some situations. As written, the Rule applies to applicants searching independently

who must document their work search through job applications. Whether a specific way of

requesting employment constitutes a “job application” is a fact-specific question arising in some

situations, and thus it is not properly before us. Tex. Gov’t Code § 2001.038(a); LMV-AL Ventures,

LLC, 520 S.W.3d at 124.

              The carriers also argue that Rule Section (d)(1)(D) is invalid because it defines “job

applications” as “work search contacts” under the definition created by TWC. However, this

argument conflates their validity challenges to (d)(1)(D) and (f) and their ad-hoc rulemaking

challenge to some agency materials. Section (d)(1)(D) does not mention “work search contacts.”

Rather it mentions “work search efforts,” an umbrella term used in the Statute. To the extent that

any of the challenged division materials or Rule Subsection (f) invalidly defines job applications

                                                  15
as work-search contacts, that is relevant to the validity and applicability challenges to those texts,

which are addressed below, but does not invalidate Section (d)(1)(D). Thus, Rule Section

(d)(1)(D) does not contravene the specific statutory language.

              Next, we consider whether the Rule runs counter to the general objectives of the

Statute, which we discern from the plain text of the Statute. See Texas State Bd. of Exam’s of

Marriage & Family Therapists, 511 S.W.3d at 33. The Division argues that the Statute’s objective

is to improve return-to-work outcomes for employees interacting with the workers’ compensation

system. The carriers argue that the Statute’s objective is “to improve access to effective TWC

return to work programs and remove ambiguity.” Specifically, they argue that the Sunset

Commission’s report regarding the former system shows that the legislative intent was to

encourage claimants to go through vocational programs or TWC rather than to search for jobs on

their own. However, the source of the general objective of the Statute must come from the text of

the statute. See Texas State Bd. of Exam’rs of Marriage & Family Therapists, 511 S.W.3d at 33

(“We discern those ‘general objectives’ from the plain text of the statutes that grant or limit the

agency's authority”); Texas Health Presbyterian Hosp. of Denton v. D.A., 569 S.W.3d 126, 135

(Tex. 2018) (noting courts do not rely on extrinsic aids such as legislative history for

unambiguous statutes).

              The Workers’ Compensation Act was enacted “to balance the competing interests of

providing ‘compensation for injured employees while protecting employers from the costs of

litigation.’” SeaBright Ins. v. Lopez, 465 S.W.3d 637, 642 (Tex. 2015) (quoting In re Poly-Am.,

L.P., 262 S.W.3d 337, 350 (Tex. 2008). The SIB Statute facially encourages unemployed or

underemployed injured individuals in the Workers’ Compensation System to seek employment by

supporting that search through SIB payments. See Tex. Lab. Code § 408.1415. The requirements

                                                 16
for what qualifies as a satisfactory work search effort to qualify for SIB payments, demonstrate

that the Statue’s purpose is to increase the number of individuals in the Workers’ Compensation

System that successful return to work. However, the Statute does not on its face show a preference

for employees to do so through a vocational rehabilitation program, through TWC, or through their

own job searches. See id.

              The Division’s determination that a job application includes asking for a job by

phone or in person rather than only by a written document is not counter to that objective. Rather,

the Division argues that this broader definition is used based on consideration of employment

availability factors through their consultation with TWC. See Tex. Lab. Code § 408.1415 (b)(3),

(c). For example, the Division considers that some industries regularly do not require form

documents for applying for employment. The Division argues that its wider definition allows for

employees to apply in the manner in which an employer prefers and is most likely to result in

employment. Further, the agency argues that the carriers’ more restrictive definition of a job

application would run counter to the general objectives of the Statute because it would discourage

job seekers from applying for jobs that do not require a written form to apply. The Division’s

determination does not run counter to the general objectives of the Statute.

              Next, we consider whether the Rule imposes additional burdens in excess of or

inconsistent with the statute. See Mid-Century Ins., 187 S.W.3d at 758. For the same reasons that

the Rule does not contravene the statutory language nor run counter to the general objectives of

the statute, it also does not impose additional burdens in excess of or inconsistent with the Statute.

The Statute creates guidelines for meeting the requirement of searching for work that entitles

injured employees to SIB payments, and it directs the Division to create rules to further implement

the guidelines. Defining “job applications” to include ways of applying for a job other than

                                                 17
through a written form does not create any additional burdens in excess of or inconsistent with

the Statute.

               The Division’s exclusion of “submitted by the recipient” from the Rule does not

make the Rule invalid, because it does not create a rule that is contrary to the statute, that runs

counter to the statute’s objectives, or that imposes additional burdens in excess of or inconsistent

with the statute. See id.; see also Tex. Lab. Code § 408.1415; 28 Tex. Admin. Code § 130.102

(Eligibility for Supplemental Income Benefits; Amount). Thus, Rule 103.102(d)(1)(D) is not

facially invalid. See 28 Tex. Admin. Code § 130.102 (Eligibility for Supplemental Income

Benefits; Amount). We reverse the district court’s ruling to the contrary.

APPLICABILITY CHALLENGE TO RULE 130.102(F)

               The carriers asserted below, and the trial court agreed, that Rule Section (f)’s

mention of “work search contacts” is invalid and inapplicable when applied to individuals seeking

employment on their own. The Division argues that it included Subsection (f) in response to the

Statute’s explicit direction to the Division to “establish the level of activity that a recipient should

have with the Texas Workforce Commission and the Department of Assistive and Rehabilitative

Services,” Section 408.1415(b)(1), and “define the number of job applications required to be

submitted by a recipient to satisfy the work search requirements,” Section 408.1415(b)(2). Rule

Section (f) reads:

       (f) Work Search Efforts. As provided in subsection (d)(1)(C) and (D) of this section
       regarding active participation in work search efforts and active work search efforts,
       an injured employee shall provide documentation sufficient to establish that he or
       she has, each week during the qualifying period, made the minimum number of job
       applications and[/]or work search contacts consistent with the work search contacts
       established by TWC which are required for unemployment compensation in the
       injured employee’s county of residence pursuant to the TWC Local Workforce

                                                  18
       Development Board requirements. If the required number of work search contacts
       changes during a qualifying period, the lesser number of work search contacts shall
       be the required minimum number of contacts for that period. If residing out of
       state, the minimum number of work search contacts required will be the number
       required by the public employment service in accordance with applicable
       unemployment compensation laws for the injured employee’s place of residence.

28 Tex. Admin. Code § 130.102(f) (Eligibility for Supplemental Income Benefits; Amount). Thus,

Rule Section (f) requires the number of job applications—combined with the number of work-

search contacts—to meet the quantitative requirements set by TWC for unemployment-

compensation benefits. The carriers do not challenge the Division’s authority to set this numerical

requirement or to use TWC’s system for determining how many job applications must be made by

an individual job seeker or how many work-search contacts must be made by job seekers working

with TWC.

             Rather, the crux of the dispute over Rule Section (f) is whether the section

impermissibly allows an injured employee searching for work on their own, outside of TWC, to

count “work search contacts,” as defined by TWC, as “work search efforts” without having to

document those work-search efforts with job applications as required by the Statute.            Id.

Specifically, the carriers argue that the inclusion of “and[/]or” in between “job applications” and

“work search contacts” creates a fourth pathway for entitlement to SIB payments that is not

authorized by the Statute by conflating “work search contacts” and “job applications.”

             The Division makes two significantly different arguments regarding this Section.

We first address its argument that “work search contacts,” as defined by TWC, is consistent with

the legislature’s intended definition of “job applications.” TWC’s “work search contacts” include:

                                                19
       (A) utilizing employment resources available at Workforce Centers that directly
       lead to obtaining employment, such as:

               (i) using local labor market information;

               (ii) identifying skills the claimant possesses that are consistent with targeted
               or demand occupations in the local workforce development area;

               (iii) attending job search seminars, or other employment workshops that
               offer instruction in developing effective work search or interviewing
               techniques;

               (iv) obtaining job postings and seeking employment for suitable positions
               needed by local employers;

       (B) attending job search seminars, job clubs, or other employment workshops that
       offer instruction in improving individuals’ skills for finding and obtaining
       employment;

       (C) interviewing with potential employers, in-person or by telephone;

       (D) registering for work with a private employment agency, placement facility of a
       school, or college or university if one is available to the claimant in his or her
       occupation or profession; and

       (E) other work search activities as may be provided in Agency guidelines.

40 Tex. Admin. Code § 815.28 (Work Search Requirements).

             We look to the definitions of “job application” proffered by the parties and supported

by dictionary definitions to establish the outer boundaries of the plain meaning of “job

application.” Pridgen, 653 S.W.3d at 183. These outer bounds are carriers’ definition of, “a letter

                                                 20
or form containing details of your qualifications, skills, experience, etc. that you send to an

organization when you are applying for a job with them,” and the Division’s definition of “any

request for employment.” Based on these boundaries, we agree with the carriers that “work-search

contacts,” as defined by TWC, include some work-search efforts that do not fall within a

reasonable definition of “job application.” While the statute’s explicit allowance of consultation

with TWC encompasses defining the number of job applications consistent with work-search

contacts, it does not give the agency the discretion to include work-search contacts that are not

reasonably “job applications.” See Tex. Lab. Code § 408.1415(c); Mid-Century Ins., 187 S.W.3d

at 758.

              However, the Division also argues that Rule Section (f) does not act to conflate “job

applications” with “work search contacts” but rather the first sentence—“[a]s provided in

subsection (d)(1)(C) and (D) of this section regarding active participation in work search efforts”—

informs and restricts the rest of the section. Specifically, the Division argues that the mention of

job applications relates back to Section (d)(1)(D) and requires “work search efforts documented

by job applications,” and the reference to “work search contacts” relates back to Section (d)(1)(C)

and only applies to searches done through TWC. It further argues that “consistent with the work

search contacts established by TWC which are required for unemployment compensation in the

injured employee’s county of residence pursuant to the TWC Local Workforce Development

Board requirements,” modifies the word “number,” and thus only sets a numerical standard. This

interpretation of the Rule (f) is a reasonable interpretation of the language of the rule, is consistent

with the Statute’s language, is consistent with the general objectives of the Statute, does not impose

additional burdens, is consistent with the carriers’ argument, and is consistent with the district

court’s ruling on this issue. See Tex. Lab. Code § 408.1415(c); Mid-Century Ins., 187 S.W.3d at

                                                  21
758. To the extent Section (f) is applying “work search contacts” to “job applications” solely for

the purpose of setting a numerical standard, it is consistent with the Statute and thus valid.

                However, Rule Section (f) does not apply to include all work-search contacts within

the definition of “job application,” or to allow work-search efforts that are not documented by

written or oral job applications to count towards the satisfactory evidence of an active work-search

effort for job seekers searching on their own. Thus, we affirm the district court’s ruling on

this issue. 3

AD HOC RULES CHALLENGE

                The carriers challenge on cross-appeal, the district court’s ruling that the Division’s

preamble to the Rule, Appeals Panel Decision 10029-s, Appeals Panel Decision Manual, and the

Application for Supplemental Income Benefits do not contain invalid ad hoc rules. Specifically,

the carriers argue that these materials contain ad hoc rules because they create a fourth pathway to

receive SIB payments in which an injured employee may complete a wider category of “work

search efforts” without being required to document those efforts with job applications. The

Division concedes that with the exception of the appeals-panel decision, the other three challenged

materials—the Rule’s preamble, the manual, and the SIBs application—include statements of

general applicability. The Division also concedes that all challenged materials concern more than

the internal management and organization of the Division. However, the Division argues that none

         3 Texas Cotton Ginners’ Trust raised on cross-appeal an issue that would only become
relevant in this appeal if we reversed the district court’s finding that “work search contacts” do not
qualitatively apply to individuals conducting independent work search efforts. Specifically, they
argued that if “work search contacts” qualitatively—compared to quantitatively—applied to job
seekers searching independently then this Court should enter declaratory judgment that all
qualitative requirements for “work search contacts” must be enforced by the Division. Because
we affirm the district court on this issue, we do not address this alternative argument.
                                                   22
of the challenged materials include ad hoc rules because the Rule’s preamble, the manual, and

APD 10029-S do not implement, interpret, or apply law or policy in a way that amounts to an

amendment or repeal of an existing Division rule because those statements merely restate Rule

130.102(f); APD 10029-S does not include any statement of general applicability because it

resolved a contested case involving only the rights of the parties to that case; and the challenge to

the SIB application is not a statement because it is based on an omission of language.

              Construction of administrative rules, like statutes, is a question of law that we review

de novo under traditional principles of statutory construction. Teladoc, Inc. v. Tex. Med. Bd.,

453 S.W.3d 606, 614 (Tex. App.—Austin 2014, pet. denied). It is undisputed that the Division

did not promulgate any of the challenged materials in accordance with the APA’s notice-and-

comment rulemaking requirements. See Tex. Gov’t Code §§ 2001.023–.030. Thus, we need only

determine whether any of the challenged materials contain a “rule” within the meaning established

by the APA. See El Paso Hosp. Dist. v. Texas Health & Human Servs. Comm’n, 247 S.W.3d 709,

715 (Tex. 2008) (“When an agency promulgates a rule without complying with the proper

rule-making procedures, the rule is invalid.”). A “rule” under the APA:

               (A) means a state agency statement of general applicability that:

                       (i) implements, interprets, or prescribes law or policy; or

                       (ii) describes the procedure or practice requirements of a
                       state agency;

               (B) includes the amendment or repeal of a prior rule; and

                                                 23
               (C) does not include a statement regarding only the internal
               management or organization of a state agency and not affecting
               private rights or procedures.

Tex. Gov’t Code Ann. § 2001.003(6).

             Agency pronouncements that advise third parties about applicable legal

requirements may be interpretations of law that constitute “rules” under the APA. Texas Dep’t of

Transp. v. Sunset Transp., Inc., 357 S.W.3d 691, 703 (Tex. App.—Austin 2011, no pet.).

However, “an informal agency statement that does no more than restate its own formally

promulgated rules would not in itself be a ‘rule.’” Id. We will consider whether the challenged

materials include an invalid “rule” under the APA one source material at a time.

PREAMBLE

             The carriers allege that the Rule’s preamble includes two sets of comment and

Division response that include an ad hoc rule:

       Comment: Commenters suggest expanding the subsection by amending it to show
       that the active work search applications must be submitted to an employer that has
       a position currently open, will have one open in the near future, or is hiring during
       the qualifying period.

       Agency Response: The Division disagrees. In establishing what may be considered
       a job application, the Commissioner has determined it is appropriate to require
       compliance consistent with that of TWC requirements regarding work search
       contacts. TWC has implemented rules and provides guidance that describes the
       type of activities that may constitute a work search contact.

       Comment: Commenter requests clarification of the phrase “has performed active
       work search efforts documented by job applications” that requires an injured
       employee, who engages in a job search outside of TWC in an effort to establish
       SIBs entitlement, to document those work search efforts by submitting completed

                                                 24
       job applications and that other job search activities will not be sufficient to establish
       SIBs entitlement.

       Agency Response: This Division clarifies that, as set forth in adopted § 130.102(f),
       “work search efforts” encompasses both job applications and work search contacts
       as described by the TWC rules.

34 Tex. Reg. 2145 (2009) (to be codified at 28 Tex. Admin. Code § 130.102) (proposed October

3, 2008) (Tex. Dep’t of Ins., Div. of Workers’ Comp.). As discussed above, the Statute requires

an injured employee searching on their own to document their search with job applications and the

wider term of “work search contacts” does not apply qualitatively to that situation. The following

language in the preamble expands Rule (d)(1)(D) by defining a “job application” as “work search

contacts”: “In establishing what may be considered a job application, the Commissioner has

determined it is appropriate to require compliance consistent with that of TWC requirements

regarding work search contacts.” Id. When asked what a “job application” is, the Division

responded that it is a “work search contact.”

              The second challenged response correctly states that both job applications and work-

search contacts are under the umbrella term “work search efforts.” As discussed above, work-

search contacts not documented by job applications only count as a valid work-search effort for

those going through TWC. By including both types of work-search efforts in an answer to a

comment that only concerns searches outside of TWC, the Division implies that work-search

contacts can qualify as “job applications” for independent job seekers. Although the response does

not in isolation expand the properly applied scope of Section (f), in combination with the comment

it answers, it implicitly does. This conclusion is further demonstrated by the application of this

                                                  25
comment’s language in Appeals Panel decision 100229-s and the Division’s Appeals Panel

Division Manual, discussed below.

             The Division argues that both comments simply restate the language of Rule Section

(f). See 28 Tex. Admin. Code § 130.102(f) (Eligibility for Supplemental Income Benefits;

Amount). However, this argument is similar to the Division’s first argument in defense of Section

(f) that defining “job applications” as “work search contacts” is consistent with the Statute. See

Tex. Lab. Code § 408.1415; 28 Tex. Admin. Code § 130.102(f) (Eligibility for Supplemental

Income Benefits; Amount). As we discussed above, the Statute does not support defining “job

applications” as “work search contacts.” See Tex. Lab. Code § 408.1415; 40 Tex. Admin. Code

§ 815.28 (Work Search Requirements). Thus, the preamble’s language that interprets the Rule as

equating the two terms is a new rule of general applicability that amends Rules (d)(1)(D) and (f).

The new rule was not promulgated through the proper process and is thus invalid. See El Paso

Hosp. Dist., 247 S.W.3d at 715; Tex. Gov’t Code § 2001.003(6).

APD 100229-S

             In APD 100229-s, the hearing officer had found that the claimant made 65 work-

search efforts but was not entitled to SIB payments because only five of those included job

applications. The appeals panel reversed the hearing officer’s denial of benefits based on the

Division’s interpretation of the Rule included in the preamble that equated job applications with

work-search contacts. Appeal No. 100229-s, 2010 WL 1782362, at *3 (Tex. Div. of Worker’s

Comp. Apr. 30, 2010) (“Although Rule 130.102(d)(1)(D) requires that the injured employee for

each week during the entire qualifying period ‘performed active work search efforts documented

by job applications,’ the preamble to Rule 130.102(d)(1)(D) clarifies that ‘work search efforts’

encompass both job applications and work search contacts described by TWC rules.”).

                                               26
              The holding of the challenged appeals decision is not a rule for purposes of the APA

because, as the Division argues, it is not an agency statement of general applicability because it

resolved a “contested case” involving only the rights of the parties to that case, which is

distinguishable from a “rule” under the APA. See Tex. Gov’t Code § 2001.003(1), (6)(a); Railroad

Comm’n v. WBD Oil & Gas Co., 104 S.W.3d 69, 79 (Tex. 2003). Thus, the statements in APD

100229-s are not a “rule” for purposes of the APA.

DIVISION’S APPEALS PANEL DECISION MANUAL

              The Division maintains an Appeals Panel Decision Manual. As the manual’s

introduction establishes, the primary purpose of the manual “is to help the Appeals Panel achieve

consistency in its decisions and inform its customers of the legal principles it expects to follow in

deciding appeals.” Under the manual’s subheading, “IE Did Meet Work Search Requirements,”

is a summary of one appeals decision, which is APD 100229-s. The summary includes a

restatement of the holding in APD 100229-s that relies on the invalid rule from the challenged

preamble sections. Thus, the challenged section of the manual that interprets the Rule as equating

“job applications” and “work search contacts” is a new rule of general applicability that amends

the Rules (d)(1)(D) and (f). The new rule was not promulgated through the proper process and is

thus invalid. See Tex. Gov’t Code § 2001.003(6); El Paso Hosp. Dist., 247 S.W.3d at 715.

SIB APPLICATION

              The carriers argue that the Application for Supplemental Income Benefits, Form

DWC-052, contains an invalid rule because it does not require documentation of an active work

search by job applications submitted. The carriers argue that this new rule is demonstrated by

there being no place on the form where an applicant can specify whether he is looking for work

                                                 27
through the TWC. The Division argues that this is not a statement but rather an omission of details

and thus cannot constitute a rule. See Tex. Gov’t Code § 2001.003(6)(A).

              The application form includes a section for applicants to specify the number of “work

search efforts” they completed and a section titled “Notes and Type of Documentation Attached

(see instructions).” The form also has the applicant certify that they “have complied with the Texas

Department of Insurance, Division of Workers’ Compensation (TDI-DWC) Work Search

Requirements (Texas Lab. Code § 408.1415 and Texas Administrative Code §130.101 and

§130.102).” The instructions include the following regarding documenting work-search efforts:

       To Document Work Searches—If you have not returned to work and you are able
       to work in any capacity, you must look for a job to match your ability to work
       during each week of the qualifying period. Appropriate documentation includes:

       • Work search log attached to DWC Form-052, Application for Supplemental
       Income Benefits;

       • Documentation about any follow-up visits to a potential employer; and/or

       • Copies of employment applications or resumes which document your efforts to
       find a job.

Therefore, although the form does not specify the difference between documenting work-search

efforts done through TWC and ones done independently, it cites to the Statute, which as discussed

above, unambiguously differentiates between the two situations. Thus, the SIB application form

does not contain any statement that equates job applications and work-search contacts. See Tex.

Gov’t Code § 2001.003(6). The application does not contain a rule for purposes of the APA.

                                                28
               In sum, the preamble and the manual do contain invalid rules. We reverse the district

court’s ruling to the contrary. The Appeals Panel Decision and the SIB application form do not

contain rules as defined under the APA. Therefore, we affirm the district court’s ruling as to those

two documents.

EXCLUDED EXPERT WITNESS

               Accident Fund Insurance Company challenges on cross-appeal, the district court’s

grant of the Division’s motion to exclude its expert witness. Accident Fund argues that its expert

witness would have testified regarding “whether the fourth pathway authorized by the Division is

as likely to lead to employment as the three pathways dictated by the Legislature.” The Division

argues that exclusion was proper and that Accident Fund cannot show that the exclusion

was harmful.

               We review a trial court’s exclusion of expert testimony for abuse of discretion.

K-Mart Corp. v. Honeycutt, 24 S.W.3d 357, 360 (Tex. 2000). We can only reverse on trial court

error if it was harmful, that is, if the error “probably caused the rendition of an improper

judgment,’” or “probably prevented the appellant from properly presenting the case to the court of

appeals.” Tex. R. App. P. 44.1(a); Diamond Offshore Servs. Ltd. v. Williams, 542 S.W.3d 539,

551 (Tex. 2018).

               Without deciding whether the exclusion was error, we agree with the Division that

the exclusion of the expert testimony was not harmful. See Tex. R. App. P. 44.1(a); Diamond

Offshore Servs. Ltd., 542 S.W.3d at 551. None of the issues raised required consideration of

whether a fourth method of SIB eligibility was as likely to result in employment as the three

methods explicitly set forth in the Statute. See Tex. Lab. Code § 408.1415.

                                                 29
                                        CONCLUSION

             Because Section 130.102(d)(1)(D) of the Rule is facially valid, we reverse the district

court’s judgment to the contrary that enjoined the Division from applying that rule. Because job

seekers not working with TWC must document their work-search efforts with job applications, the

district court’s judgment enjoining the Division from applying the term “work search contacts” in

Rule Section (f) qualitatively to independent job seekers is affirmed. Because the preamble and

the manual do contain invalid rules, we reverse the district court’s judgment to the contrary.

Because the Appeals Panel Decision and the SIB application form do not contain rules as defined

under the APA, we affirm the district court’s judgment as to those two documents.

                                             __________________________________________
                                             Darlene Byrne, Chief Justice

Before Chief Justice Byrne, Justices Triana and Kelly

Affirmed in Part, Reversed and Rendered in Part

Filed: February 28, 2023

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