Court Opinion

ID: 3008258
Source: CourtListenerOpinion
Date Created: 2015-10-07 18:13:41.403521+00
Date Added: 2024-06-11T18:03:22.159460
License: Public Domain

IN THE SUPREME COURT OF TEXAS
                                        444444444444
                                          NO . 09-0495
                                        444444444444

                 TEXAS MUTUAL INSURANCE COMPANY, PETITIONER,
                                                v.

                             P. LANCE MORRIS, RESPONDENT

           4444444444444444444444444444444444444444444444444444
                           ON PETITION FOR REVIEW FROM THE
                 COURT OF APPEALS FOR THE FOURTEENTH DISTRICT OF TEXAS
           4444444444444444444444444444444444444444444444444444

                                        PER CURIAM

       Lance Morris injured his back while working and his employer’s workers’ compensation

insurer, Texas Mutual Insurance Company (TMIC), accepted the injury as compensable. Three years

later when it was discovered that Morris had herniated lumbar intervertebral discs, TMIC disputed

whether they were causally related to the original injury. The Texas Department of Insurance

Division of Workers’ Compensation (the division) determined that the disc herniations were related

to the original injury and ordered TMIC to pay medical benefits, which it did. Morris later sued

TMIC for damages caused by its delay in paying benefits. The trial court rendered judgment for

Morris, and the court of appeals affirmed. Based on our recent decision in Texas Mutual Insurance

Co. v. Ruttiger, ___ S.W.3d ___ (Tex. 2012), we reverse and render judgment for TMIC.

       On June 12, 2000, Morris injured his back while working for the Justin Community

Volunteer Fire Department. The Fire Department reported to TMIC that Morris had strained his
back while working. TMIC accepted the injury as compensable and paid benefits. In March of

2003, Morris went to a hospital emergency room with severe back pain and was diagnosed as having

herniated lumbar discs. On April 1, 2003, Dr. Charles Neblett requested TMIC to preauthorize

lumbar laminectomy surgery to treat the herniated discs. TMIC approved the surgery as medically

necessary, see 28 TEX . ADMIN . CODE § 134.600, but later disputed its compensability on the basis

that the herniated discs were not causally related to the March 2000 injury.

        Morris eventually requested, and the division held, two benefit review conferences to attempt

to resolve the compensability dispute. See TEX . LAB. CODE § 410.021. The dispute was not resolved

so a contested case hearing was held. See id. § 410.025. The hearing officer concluded that Morris’s

original injury caused or aggravated the lumbar disc herniations, they were compensable, and TMIC

was liable for compensation. The division specifically ordered TMIC to pay medical benefits.

TMIC then paid Morris both medical and income benefits relating to the disc problems.

        Morris sued TMIC for violating article 21.21 of the Insurance Code,1 breaching its common

law duty of good faith and fair dealing, and violating the Deceptive Trade Practices Act (DTPA),

TEX . BUS. & COM . CODE §§ 17.41–.63. His suit was based on TMIC’s denial of compensability and

delay in paying benefits until ordered to do so by the division. A jury found for Morris and awarded

damages for past mental anguish, damage to his credit reputation, additional damages because TMIC

acted knowingly, and attorney’s fees. The trial court rendered judgment that Morris recover under

        1
        The Legislature has re-codified Insurance Code article 21.21 and placed the relevant provisions in Insurance
Code Chapter 541. References to Insurance Code provisions will be to the re-codified sections.

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his Insurance Code claim. The judgment also provided that if the Insurance Code claim failed on

appeal, he could elect to recover under the common law claim or the DTPA claim.

       The court of appeals concluded that there was no evidence to support the damages awarded

for loss of credit reputation. It reversed the trial court’s judgment in part and remanded for further

proceedings. 287 S.W.3d 401, 434-35.

       In this Court TMIC seeks reversal of that part of the court of appeals’ judgment favorable to

Morris. It advances multiple reasons, but we address only four of them.

       We first consider an argument TMIC did not raise in the courts below: the trial court did not

have jurisdiction over Morris’s suit because he did not exhaust administrative remedies available to

him under the Workers’ Compensation Act (Act). TEX . LAB. CODE §§ 410.002–.308; Am. Motorists

Ins. Co. v. Fodge, 63 S.W.3d 801, 804-05 (Tex. 2001); see, e.g., Minton v. Gunn, 355 S.W.3d 634,

639 (Tex. 2011) (recognizing that we must have jurisdiction to consider an appeal before reaching

the merits). TMIC asserts that because Morris’s claim is for delay damages—damages from TMIC’s

delay in paying benefits while it was contesting compensability of the lumbar claim—the trial court

did not have jurisdiction because Morris did not timely use remedies afforded by the Act for

obtaining benefits. TMIC says the evidence is undisputed that Morris (1) delayed in requesting a

first benefit review conference for more than six months after TMIC contested compensability; (2)

did not request the division to enter an interlocutory order directing TMIC to pay benefits; (3) failed

in his request for a benefit review conference to explain why an expedited setting was needed, thus

causing the division to not set an expedited conference; (4) agreed to two non-expedited benefit

review conferences; and (5) agreed to a non-expedited contested case hearing. Morris responds, in

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part, that (1) the division procedures which TMIC claims he did not timely use cannot be

jurisdictional because they are permissive, not mandatory; (2) he obtained a division finding that his

back surgery and subsequent medical treatment were compensable so he complied with the

exhaustion requirements set out in Fodge, 63 S.W.3d 801; and (3) his actions and inactions of which

TMIC complains are not jurisdictional matters, but rather go to the question of whether he mitigated

his damages and TMIC waived that issue by not raising it in the lower courts.

       We held in Fodge that a trial court does not have jurisdiction over a claim for delay in

providing compensation benefits if the division has not made a determination that the benefits were

due. Id. at 802, 804-05. There, workers’ compensation claimant Anne Fodge claimed she was

injured on the job and American Motorists, her employer’s compensation insurer, denied the claim.

Id. at 802. The division determined at a contested case hearing that she had been injured on the job

and was entitled to temporary income benefits, but it did not determine whether she was entitled to

any medical benefits. Id. Fodge then sued American Motorists. Part of her claims were that

American Motorists’ delay in paying income and medical benefits until after the division ordered

it to do so violated the DTPA and Insurance Code and breached its common law duty of good faith

and fair dealing. Id. at 802-03. We noted that the division had exclusive jurisdiction to determine

whether benefits were due to Fodge and it had not yet determined whether she was entitled to

medical benefits, although it had determined she was entitled to income benefits. Id. at 804-05. We

held that the trial court had jurisdiction over Fodge’s claim for delayed payment of income benefits,

but because the division had not determined that she was entitled to medical benefits the trial court

did not have jurisdiction over her claim for delayed medical benefits. Id. at 804. But we did not

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address whether the timing of a claimant’s utilization of the Act’s procedures is an issue that must

be determined by the division before a trial court has jurisdiction over a claim for delay damages.

       The Act contains certain deadlines that must be met. It specifies that an injured employee

must give notice of injury to the employer not later than the thirtieth day after the injury occurs.

TEX . LAB. CODE § 409.001(a). An employee’s failure to timely give notice of injury can relieve the

insurer of its obligation to pay compensation. Id. § 409.002. The Act also specifies that an injured

employee must file a claim for compensation not later than one year after the injury occurs, or, if the

injury is an occupational disease, not later than one year after the employee knew or should have

known that the injury may be related to the employment. Id. § 409.003. An employee’s failure to

timely file a claim for compensation can also relieve the insurer of its obligation to pay

compensation. Id. § 409.004. But TMIC points to no provision in the Act that specifies time limits

for claimants to request benefit review conferences, penalizes claimants if they delay in requesting

them, or requires the division to determine whether employees’ benefit review conference requests

are timely. The section of the Act addressing requests for benefit review conferences provides only

that the division may “[o]n receipt of a request from a party or on its own motion” direct the parties

to meet in a benefit review conference. Id. § 410.023(a). Given the silence of the Act as to time

constraints for claimants to request a benefit review conference or the effect of delay in filing one,

we conclude that Morris is correct. The same goes for interlocutory orders and delays in connection

with contested case hearings.

       We conclude that under this record, Morris’s delays in requesting division action were not

jurisdictional in nature, but rather were matters of whether he mitigated his damages. Thus his

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delays in seeking relief from the division did not deprive the trial court of jurisdiction. Because of

our disposition of the appeal we do not further address the timeliness of Morris’s seeking relief from

the division.

         Next we consider TMIC’s argument that causes of action for unfair claims settlement

practices under Insurance Code section 541.060 and breach of the common law duty of good faith

and fair dealing do not apply in the workers’ compensation context.2 After the parties filed their

briefs, we held in Ruttiger that a claimant cannot recover damages under section 541.060 from a

workers’ compensation insurer for unfair claims settlement practices. ___ S.W.3d at ___. We also

held that amendments to the Act eliminated the need for a cause of action for breach of the common

law duty of good faith and fair dealing against workers’ compensation insurers. Id. at __ (overruling

Aranda v. Ins. Co. of N. Am., 748 S.W.2d 210, 212-13 (Tex. 1988)). In accord with our decision in

Ruttiger we agree with TMIC that Morris cannot recover on either of these claims.

         Finally, we address whether Morris can recover under Insurance Code section 541.061. We

held in Ruttiger that a cause of action under section 541.061 for misrepresentation of an insurance

policy is not necessarily incompatible with the workers’ compensation system. Id. at ___. TMIC

argues that the basis of Morris’s claim for misrepresentation is TMIC’s filing of the dispute based

on a lack of causal relationship between the 2000 injury and the disc herniations, and that its dispute

simply was not a misrepresentation of its policy. Morris does not contest TMIC’s position or point

to any statements or actions by TMIC that he contends constituted untrue statements about or failure

         2
           Morris asserts that TMIC failed to preserve its challenge to his Insurance Code claim. But TMIC objected
to that question in the jury charge and challenged the legal sufficiency of the evidence to support that finding in the court
of appeals. W e conclude that it preserved the challenge.

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to disclose something about the insurance policy. TMIC’s Notice of Refused or Disputed Claim

specified that TMIC disputed whether Morris’s compensable June 2000 back strain extended to his

lumbar disc herniations and whether he had a disability as a result of the original back strain. The

testimony and other evidence bore out that question as being the basis for TMIC’s denial of

compensability. Thus, the dispute between Morris and TMIC was the extent of Morris’s injury, not

what the policy said or whether it covered the disc problems if they were related to the back strain.

See Ruttiger, ___ S.W.3d at ___. We agree with TMIC that there is no evidence it misrepresented

its policy.

        Morris’s DTPA claim depends on the validity of his Insurance Code claim. Because his

claims under the Insurance Code fail, he cannot recover on his DTPA claim. See id. at ___.

        We grant TMIC’s petition for review. Without hearing oral argument, see TEX . R. APP . P.

59.1, we reverse the court of appeals’ judgment and render judgment that Morris take nothing.

OPINION DELIVERED: October 26, 2012

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