Opinion
No. 11-20-00240-CV No. 11-20-00241-CV
11-06-2020
IN RE SENTRY INSURANCE A MUTUAL COMPANY
Original Mandamus Proceeding
MEMORANDUM OPINION
Relator, Sentry Insurance a Mutual Company (Sentry), filed these original petitions for writ of mandamus in which it requests that we instruct the Honorable Glen Harrison, Presiding Judge of the 32nd District Court of Nolan County, to dismiss for lack of jurisdiction Real Party in Interest, Donald Bristow's counterclaims against Sentry and third-party claims against Judson Francis, Jr., a Professional Corporation (the Corporation), in Cause Nos. DO-92-17,178 and 19,940. We conditionally grant the petitions for writ of mandamus as to Bristow's claims based on Sentry's alleged delayed payment of, and failure to pay, medical expenses. We deny the petitions for writ of mandamus in all other respects.
Background
On September 17, 1990, Bristow was rendered a paraplegic from an accidental injury suffered in the course and scope of his employment for Nunn Manufacturing Company. Sentry was the workers' compensation carrier for Nunn. Bristow's injury occurred before January 1, 1991, and his claim for workers' compensation benefits was determined based on the law in effect at the time of the injury. See Act of Dec. 11, 1989, 71st Leg., 2nd C.S., ch. 1, § 17.18(a), (c), 1989 Tex. Gen. Laws 1, 122.
Bristow filed Cause No. DO-92-17,178 against Sentry in the 32nd District Court. Sentry and Bristow settled the lawsuit on March 31, 1993. Pursuant to the parties' Compromise Settlement Agreement (CSA), Sentry agreed to pay Bristow (1) $30,000 on his claim that he was entitled to a van, (2) $30,000 every six years for the rest of his life in order to replace the van, and (3) $125,000 for the cost of home health care that Bristow had received before March 31, 1993. The parties also agreed that Sentry would pay a monthly sum of $3,650 for future home health care to "Bristow and his attorney" and that the amount of Sentry's monthly obligation would not "increase or decrease" from $3,650. Sentry was required to pay for home health care "only for so long as Bristow [was] at his home residence and not absent in a hospital or other health care facility." Finally, Sentry's obligation to make the monthly home health care payments commenced on April 3, 1993, and was required to be paid "monthly, thereafter, as incurred, and by the 3rd day of each month" to Bristow and his attorney, Francis & Cross, P.C., at the attorney's address.
Bristow's petition is not included in the mandamus record.
The parties agreed that, based on Bristow's physical condition, Sentry could contest that he no longer needed home health care. Sentry was required to provide written notice to Bristow and his attorneys that it contended that Bristow's physical and mental condition no longer reasonably required home health care. After Sentry gave this notice, any dispute as to home health care would be submitted to the trial court.
The trial court approved the CSA and incorporated it into a final judgment on April 6, 1993. The trial court dismissed with prejudice all claims asserted by Bristow or that could have been asserted by Bristow prior to March 22, 1993.
On January 12, 2018, and January 16, 2018, respectively, Sentry filed a motion to terminate home health care services and an amended motion to terminate home health care services. Sentry requested that the trial court order that Bristow's physical and mental condition did not reasonably require home health care and that Sentry had no further obligations under the CSA to make the monthly payments of $3,650.
Sentry also filed a motion to abate home health care payments. Sentry alleged that, pursuant to the CSA, it was required to pay Bristow $3,650 per month for home health care, as incurred; that it had made the monthly payments; and that, since 2014, Bristow had incurred only a total of $7,686.75 for home health care costs. Sentry alleged that it was entitled to a credit or offset against future payments for home health care costs of at least $167,513.25 and requested that the trial court abate Sentry's obligation to make the monthly home health care payments until the actual amount of the credit or offset could be determined.
On June 8, 2018, Judge Harrison denied Sentry's motion to abate. Judge Harrison specifically found that the CSA was still in effect and required Sentry to pay $3,650 per month to Bristow for as long as he incurred home health care expenses and that Bristow continued to use, and incur expenses for, home health care. The record does not reflect that Judge Harrison ruled on Sentry's amended motion to terminate home health care services.
On August 13, 2018, Sentry filed Cause No. 19,940 and requested a declaration that it was entitled to a credit or offset of at least $167,513.25 against any future amounts that it might owe Bristow for home health care pursuant to the CSA. Judge Harrison subsequently consolidated Cause No. 19,940 with Cause No. DO-92-17,178.
Bristow sent three letters to the Texas Department of Insurance - Workers' Compensation Division (the Division) on February 14, February 21, and February 22, 2019. Bristow provided the Division with a copy of Sentry's petition for declaratory judgment and requested a prehearing conference (1) on a dispute over the CSA and as to attorney's fees, (2) on Sentry's failure or refusal to replace dressing for a wound care vac machine, and (3) on medical benefits for nursing care services, wound care, and home health care beginning April 1, 1993, to the present and continuing into the future.
The legislature created the Texas Workers' Compensation Commission in 1989 to implement and enforce the provisions of the Texas Workers' Compensation Act. Tex. Mut. Ins. Co. v. PHI Air Med., LLC, No. 18-0216, 2020 WL 3477002, at *2 (Tex. June 26, 2020). The Commission is now the Division of Workers' Compensation at the Texas Department of Insurance. Id.; see also Act of May 29, 2005, 79th Leg., R.S., ch. 265, §§ 1.001-8.016, 2005 Tex. Gen. Laws 469, 469-610.
The Division denied Bristow's request for a prehearing conference on the ground that, after a final award or a court judgment, it has jurisdiction only to issue successive awards regarding liability on medical disputes for the cost or expense of medical equipment or services actually furnished to and received by the employee. According to the Division, "any dispute as to home health care must be submitted to the court in accordance with the terms of" the CSA. Finally, the Division indicated that, if Bristow wanted to pursue an award on unpaid bills for medical services received by him and denied by Sentry, he could submit a written request to the Division for a formal hearing to adjudicate the unpaid, disputed medical bills.
Bristow filed a third-party petition against the Corporation. Bristow alleged that, pursuant to the law in effect at the time of his injury, his attorney, Judson Francis, Jr., was to receive attorney's fees in connection with the CSA. Sentry sent the monthly checks to Francis, and Francis would disburse funds to Bristow. After Francis died in 1996, his surviving spouse, Bettie Francis, became the president and registered agent for the Corporation. Although Bettie is not an attorney, the Corporation continued to deduct attorney's fees from the monthly payments from Sentry. At some point after Sentry filed the motion to abate, the Corporation ceased making payments to Bristow. Bristow asserted that the payments of attorney's fees to a nonlawyer and a nonlawyer entity were illegal and against public policy.
On November 25, 2019, Bristow filed a third amended answer and counterclaim against Sentry in which he requested an accounting of the attorney's fees paid to the Corporation. Bristow also alleged that Sentry (1) violated the Texas Deceptive Trade Practices Act (the DTPA) because it engaged in a course of conduct meant to avoid its liability under the CSA; (2) breached the duty of good faith and fair dealing when it paid attorney's fees to a deceased attorney, made multiple attempts to avoid payment of benefits to Bristow, and failed to pay benefits timely; (3) violated the duties of good faith and fair dealing and the duty to engage in fair settlement practices imposed by Chapter 541 of the Texas Insurance Code; and (4) committed fraud based on representations when it signed the CSA that certain benefits would be paid to Bristow and then attempted to "vitiate the agreement."
Bristow filed a fifth amended answer and counterclaim on September 25, 2020, in which he expanded his common law and statutory claims. As to his claim that Sentry violated the DTPA, Bristow also alleged that Sentry attempted to avoid its obligations under the CSA even though it had received medical advice and opinions that were "in favor of Bristow and adverse to Sentry." Under his bad faith claim, Bristow added allegations that, since 2015, Sentry had engaged in a "pattern of conduct" to delay and fail to pay for medical expenses for the treatment of ulcers that Bristow developed as a result of his confinement to a wheelchair. Bristow alleged that the purpose of Sentry's conduct was to cause the ulcers to become infected so that Bristow would be hospitalized and Sentry would not be required to pay for home health care. Bristow also expanded his fraud claim to allege that Sentry "conducted a fraudulent scheme by deception and omission of material facts" when it failed to disclose to Bristow that it had obtained medical opinions that were adverse to its position that Bristow no longer needed home health care. Finally, Bristow added a claim for enforcement of the CSA on the grounds (1) that Sentry had denied payment of reasonable and necessary medical expenses and (2) that he was in continuing need of home health care.
Sentry filed a plea to the jurisdiction. Sentry asserted that the Division had exclusive jurisdiction over all compensability and medical disputes in the workers' compensation context and that a claimant's failure to secure a determination by the Division that benefits were due precluded a suit for those benefits as well as for all damages that resulted from a denial of those benefits. Sentry specifically argued that Bristow had not obtained an award in his favor from the Division on any claim asserted against Sentry; that Bristow had failed to give notice of his intent not to abide by the Division's decision that it did not have jurisdiction over any dispute about home health care and failed to submit his claims that Sentry delayed payment of, or failed to pay, medical expenses to the Division; and that, based on the Texas Supreme Court's decision in Texas Mutual Insurance Co. v. Ruttiger, 381 S.W.3d 430 (Tex. 2012), Bristow was precluded from asserting any claim for common law or statutory bad faith.
Sentry also filed a nonsuit of its petition for declaratory judgment. Sentry stated that Judge Harrison did not have jurisdiction over the request for a credit or offset because Sentry had not presented the claim to the Division. Sentry indicated that it intended to "fully exhaust the required remedies with the Division" and then, if necessary, appeal the Division's final ruling.
Judge Harrison denied Sentry's plea to the jurisdiction. Sentry filed these petitions for writ of mandamus in which it requests that we direct Judge Harrison to dismiss for lack of subject-matter jurisdiction Bristow's counterclaims against Sentry and third-party claims against the Corporation. Sentry specifically argues that Judge Harrison does not have jurisdiction over any of Bristow's claims because he did not exhaust his administrative remedies and does not have jurisdiction over Bristow's common law and statutory bad faith claims because those claims are no longer viable after Ruttiger.
Analysis
Mandamus is an extraordinary remedy and is warranted only when the trial court clearly abused its discretion and there is no adequate remedy by appeal. In re C.J.C., 603 S.W.3d 804, 811 (Tex. 2020) (orig. proceeding); In re Murrin Bros. 1885, Ltd., 603 S.W.3d 53, 56 (Tex. 2019) (orig. proceeding). The relator bears the burden to prove both of these requirements. In re H.E.B. Grocery Co., 492 S.W.3d 300, 302 (Tex. 2016) (orig. proceeding).
A trial court abuses its discretion when its ruling is arbitrary and unreasonable or is made without regard for guiding legal principles or supporting evidence. In re Nationwide Ins. Co. of Am., 494 S.W.3d 708, 712 (Tex. 2016) (orig. proceeding). "Similarly, a trial court abuses its discretion when it fails to analyze or apply the law correctly." Id.; see also In re Geomet Recycling LLC, 578 S.W.3d 82, 91 (Tex. 2019) (orig. proceeding). "A trial court has no 'discretion' in determining what the law is or applying the law to the facts." In re Geomet Recycling, 578 S.W.3d at 91 (quoting Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992) (orig. proceeding)).
Under the law in effect at the time of Bristow's injury, "[a]ll questions" arising under the workers' compensation act generally are required to be determined by the Division. Act of May 23, 1977, 65th Leg., R.S., ch. 412, § 1, 1977 Tex. Gen. Laws 1113, 1113. "After the first such final award or judgment," the Division has continuing jurisdiction "to render successive awards to determine the liability of the [carrier] for the cost or expense" of medical services "actually furnished to and received" by the employee not more than six months prior to the date of the successive award. Id. at 1114.
A party is required to give notice within twenty days of the Division's final ruling or decision that he will not abide by the ruling or decision. Id. at 1113. The party must then file suit within twenty days of when he filed the notice not to abide. Id. If the party fails to timely file suit, the Division's final ruling or decision is binding on all parties to the ruling or decision. Id. at 1114.
When, as in this case, the suit is settled and the settlement is approved by the court in an agreed judgment, any dispute that subsequently arises over "the payment of medical, hospital, nursing, chiropractic or podiatry services or aids or treatment, or for medicines or prosthetic appliances" must be "first presented" to the Division. Act of May 20, 1983, 68th Leg., R.S., ch. 501, § 1, 1983 Tex. Gen. Laws. 2934, 2934. A dispute arises when a "written refusal of payment" is filed with the Division. Id. However, the Division does not have jurisdiction "to rescind or set aside" an agreed judgment approved by the court. Id. at 2935.
If the Division has jurisdiction over a dispute under an agreed judgment, the party is required to first submit that dispute to the Division. City of Houston v. Rhule, 417 S.W.3d 440, 443 (Tex. 2013) (per curiam). A claimant's failure to exhaust his administrative remedy divests the trial court of subject-matter jurisdiction. Id.
Because Sentry filed a notice of nonsuit of its request for declaratory relief, the matters pending before the trial court are Bristow's counterclaims against Sentry and third-party claims against the Corporation. Bristow's claims fall within two categories—claims based on Sentry's obligations under the CSA and claims based on Sentry's alleged delay in payment of, or failure to pay, medical expenses related to ulcers suffered by Bristow.
Under the first category of claims, Bristow requests an accounting of the attorney's fees paid by Sentry in connection with the monthly payments under the CSA and asks that the CSA be enforced because he is in continuing need of home health care. Bristow also alleges (1) that Sentry violated the DTPA because it engaged in a course of conduct to avoid the payments of benefits to Bristow and attempted to avoid liability under the CSA after it received "medical advice and opinions" that were adverse to its position that Bristow no longer needed home health care, (2) that Sentry breached the duty of good faith and fair dealing when it paid attorney's fees to a deceased attorney, (3) that Sentry violated Chapter 541 of the Texas Insurance Code "based on the same facts," and (4) that Sentry committed fraud because it made representations when it entered into the CSA that certain benefits would be due and payable to Bristow and then attempted to avoid the agreement and because it failed to disclose to Bristow that it had obtained medical opinions that were adverse to its position.
We have reviewed the petitions for writ of mandamus and the mandamus record as it pertains to Bristow's common law and statutory claims related to Sentry's performance under the CSA, request for an accounting, and request for enforcement of the CSA on the ground that Bristow still requires home health care. As to those claims, we hold that Sentry has failed to show that it is entitled to the requested relief. Therefore, we deny Sentry's petitions for writ of mandamus as to those claims. See TEX. R. APP. P. 52.8(a) (stating that, if the appellate court determines that the relator is not entitled to the relief sought, it must deny the petition).
Under the second category of claims, Bristow alleges (1) that Sentry violated the DTPA based on a "course of conduct" that was intended to avoid its liability under the CSA, (2) that Sentry breached the duty of good faith and fair dealing when it engaged in a "pattern of conduct" to delay and fail to pay for medical expenses for the treatment of ulcers that Bristow had developed as a result of his confinement to a wheelchair and when it failed to pay benefits timely, and (3) that Sentry violated Chapter 541 of the Texas Insurance Code "based on the same facts alleged above." Bristow also seeks enforcement of the CSA because "Sentry has denied payment of reasonable and necessary medical expenses."
The Division has continuing jurisdiction to render a successive award to determine Sentry's liability for medical services and expenses provided to Bristow after March 31, 1993. See Act of May 23, 1977, 65th Leg., R.S., ch. 412, § 1, 1977 Tex. Gen. Laws 1113, 1113. Therefore, Bristow was required to submit to the Division any claim based on Sentry's alleged delayed payment of, or failure to pay, medical expenses for treatment provided to Bristow after March 31, 1993. Indeed, the Division informed Bristow that he needed to submit a request for a formal hearing to adjudicate any dispute over the payment of medical expenses. Bristow failed to submit to the Division any claim that Sentry delayed the payment of, or refused to pay, any medical expenses for services provided to Bristow and, therefore, did not exhaust his administrative remedies as to any claims based on or related to those expenses.
Because Bristow failed to exhaust his administrative remedies as to any claims based on or related to the allegedly disputed or unpaid medical bills, Judge Harrison did not have subject-matter jurisdiction over those claims. See Rhule, 417 S.W.3d at 443 (holding that claimant's failure to exhaust his administrative remedies for breach of a settlement agreement divested the trial court of jurisdiction); In re Liberty Mut. Fire Ins. Co., No. 04-14-00254-CV, 2014 WL 3747332, at *4 (Tex. App.—San Antonio July 30, 2014, orig. proceeding [mand. denied]) (holding that, because the carrier's obligation to pay any disputed expense was required to be determined by the administrative process before the trial court had jurisdiction to review the administrative determination, a claim for misrepresentation pursuant to the Texas Insurance Code must also be dismissed for lack of jurisdiction); see also Am. Motorists Ins. Co. v. Fodge, 63 S.W.3d 801, 804 (Tex. 2001) ("[J]ust as a court cannot award compensation benefits, except on appeal from a Commission ruling, neither can it award damages for a denial of payment of compensation benefits without a determination by the Commission that such benefits were due."). Therefore, Judge Harrison abused his discretion when he denied Sentry's plea to the jurisdiction as to those claims. Further, relief by mandamus is appropriate when a claimant fails to exhaust his administrative remedies through the workers' compensation system prior to filing suit. In re Accident Fund Gen. Ins. Co., 543 S.W.3d 750, 754-55 (Tex. 2017) (orig. proceeding) (per curiam); In re Crawford & Co., 458 S.W.3d 920, 928-29 (Tex. 2015) (orig. proceeding) (per curiam).
This Court's Ruling
We deny Sentry's petitions for writ of mandamus as to Bristow's common law and statutory claims related to Sentry's performance under the CSA, request for an accounting of the attorney's fees paid pursuant to the CSA, and request for enforcement of the CSA on the ground that Bristow still requires home health care.
We conditionally grant Sentry's petitions for writ of mandamus as to Bristow's common law and statutory claims based on or related to Sentry's alleged delayed payment of, or failure to pay, medical expenses incurred by Bristow after March 31, 1993. We direct Judge Harrison to dismiss for lack of subject-matter jurisdiction Bristow's claims (1) that Sentry violated the DTPA based on a "course of conduct" related to the delayed payment of, or failure to pay, medical expenses that was intended to avoid Sentry's liability under the CSA; (2) that Sentry breached the duty of good faith and fair dealing when it engaged in a "pattern of conduct" to delay or fail to pay medical expenses for ulcers that Bristow had developed as a result of his confinement to a wheelchair; and (3) that Sentry violated Chapter 541 of the Texas Insurance Code based on Sentry's alleged delayed payment of, or failure to pay, medical expenses and Bristow's request that the CSA be enforced because "Sentry has denied payment of reasonable and necessary medical expenses." A writ of mandamus will issue only if Judge Harrison does not comply by November 13, 2020.
KEITH STRETCHER
JUSTICE November 6, 2020 Panel consists of: Bailey, C.J.,
Stretcher, J., and Wright, S.C.J. Willson, J., not participating.
Jim R. Wright, Senior Chief Justice (Retired), Court of Appeals, 11th District of Texas at Eastland, sitting by assignment.