American Zurich Insurance Co. v. Samudio

370 S.W.3d 363, 55 Tex. Sup. Ct. J. 1028, 2012 WL 2476798, 2012 Tex. LEXIS 554
CourtTexas Supreme Court
DecidedJune 29, 2012
DocketNo. 10-0554
StatusPublished
Cited by31 cases

This text of 370 S.W.3d 363 (American Zurich Insurance Co. v. Samudio) is published on Counsel Stack Legal Research, covering Texas Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Zurich Insurance Co. v. Samudio, 370 S.W.3d 363, 55 Tex. Sup. Ct. J. 1028, 2012 WL 2476798, 2012 Tex. LEXIS 554 (Tex. 2012).

Opinion

Justice LEHRMANN delivered the opinion of the Court.

Under the Texas Workers’ Compensation Act, an injured worker’s impairment income benefits are determined in part by the impairment rating assigned by the Texas Department of Insurance’s Division of Workers’ Compensation. Tex. Lab.Code § 408.121(a)(1). In an appeal to the district court of the Division’s impairment rating determination, unless there is evidence of a substantial change in the worker’s condition, the court may consider only evidence of impairment that was presented [365]*365to the agency, and may only adopt an impairment rating assigned by a doctor in the administrative proceedings. Tex. Lab. Code § 410.306(c). We must decide whether a reviewing court lacks subject matter jurisdiction to resolve an impairment rating appeal if the only rating presented to the agency was invalid. We hold that the absence of a valid impairment rating does not deprive the court of jurisdiction. Consequently, we reverse the court of appeals’ judgment and remand to the trial court.

I. Background

Daniel Samudio suffered a back injury during the course of his employment that was compensable under the Texas Workers’ Compensation Act. See Tex. Lab.Code § 401.11. He eventually had four surgeries to rectify the injury, including a spinal fusion and a laminectomy. His physicians did not order preoperative flexion or extension x-rays, which would have provided evidence of any loss of motion segment integrity, a factor in determining the level of impairment. See Am. Home Assur. Co. v. Poehler, 323 S.W.3d 626, 631 (Tex.App.Tyler 2010, pet. pending). Petitioner Zurich American Insurance Company provided workers’ compensation coverage to Sa-mudio’s employer.

After Samudio filed a claim for medical benefits under the Act, the Division appointed Dr. Gaston Machado as the designated doctor in the case to determine the date Samudio reached maximum medical improvement and his impairment rating under section 408.123 of the Act. An injured worker who suffers a permanent functional or anatomical impairment after reaching maximum medical improvement is entitled to impairment income benefits, the duration of which depend on the assigned impairment rating. Tex. Lab.Code §§ 408.123, 408.121(a)(1). The impairment rating represents “the percentage of permanent impairment of the whole body resulting from a compensable injury.” Id. § 401.011(24). Impairment income benefits equal seventy percent of the worker’s average weekly wages; the benefits are paid for three weeks for each percentage point of impairment. Id. §§ 408.121(a)(1); 408.126. An impairment rating of more than fifteen percent may entitle the worker to supplemental income benefits after impairment income benefits would otherwise expire. Id. § 408.142(a)(1).

Section 408.123 of the Act provides that an impairment rating “must be based” upon the fourth edition of the Guides to the Evaluation of Permanent Impairment, published by the American Medical Association.1 The methodology for determining impairment ratings recognized in that edition of the Guides used objectively verifiable evidence to place injured workers into one of eight diagnosis-related estimate (DRE) categories. In cases where spinal fusion surgery like Samudio’s had been performed, the Guides called for the impairment rating to be based upon preoperative flexion and extension x-rays. At the time of the administrative proceedings to determine Samudio’s impairment rating, however, the Division had implemented two advisories, Advisory 2003-10 and Advisory 2003-10B, which attempted to provide an alternative standard for establishing an impairment rating when no preoperative flexion or extension x-rays had been performed. Under the advisories, a physician could consider evidence of spinal [366]*366fusion surgery of the type Samudio had in assigning a DRE. In his initial report to the Division, Dr. Machado concluded that Samudio’s impairment rating was twenty percent based on a Category IV DRE. He initially asserted that the rating was based upon the Guides, but later submitted a letter clarifying that he had relied on the advisories in light of the absence of the pre-operative flexion or extension x-rays called for in the Guides. Under the advisories, Machado included Samudio’s spinal fusion surgery as a factor in calculating the impairment rating.

American Zurich disputed the impairment rating, and the Division commenced a contested case hearing. At the hearing, the carrier submitted a letter from Dr. John Obermiller. Although he opined that Samudio’s impairment rating would be properly calculated at ten percent, Ober-miller never examined Samudio, and expressly stated that he was not providing an impairment rating. Instead, he explained that his purpose was to show that Machado’s analysis did not conform to the Guides. After the close of the hearing, the hearing examiner issued a decision finding that Samudio had an impairment rating of twenty percent. The examiner also specifically found that only one impairment rating was offered during the contested case proceeding. American Zurich appealed the examiner’s decision to the appeals panel. In February 2006, the Division notified the parties that the hearing officer’s decision was final.

American Zurich then appealed to the district court. It contended that the impairment rating the Division assigned was invalid, and that Samudio had either no impairment rating, or that the correct rating was ten. While the appeal was pending, the Austin court of appeals decided Texas Department of Insurance Workers Compensation Division v. Lumbermens Mutual Casualty Co., 212 S.W.3d 870 (Tex.App.-Austin 2006, pet. denied). In that case, the court ruled that the advisories were inconsistent with the Guides and thus invalid, and enjoined their further use. Id. at 876-77.2 After the Lumber-mens decision, Samudio filed a plea to the jurisdiction contending that the trial court lacked subject matter jurisdiction because the trial court was not empowered to provide the relief American Zurich sought. Samudio argued that American Zurich’s petition presented no justiciable controversy because the trial court was only empowered to award an impairment rating that was presented to the agency, and the only rating before the agency was the twenty percent rating advocated by Machado. The trial court granted Samudio’s plea and dismissed the case, awarding Samudio $29,246.40 in attorney’s fees under section 408.221(c) of the Act. The court of appeals affirmed. 317 S.W.3d 336, 348.

II. Jurisdiction

In an appeal of an injured worker’s entitlement to impairment income benefits, the Legislature has provided for a modified trial de novo. Tex. Workers’ Comp. Comm’n v. Garcia, 893 S.W.2d 504, 515 (Tex.1995); Tex.

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Bluebook (online)
370 S.W.3d 363, 55 Tex. Sup. Ct. J. 1028, 2012 WL 2476798, 2012 Tex. LEXIS 554, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-zurich-insurance-co-v-samudio-tex-2012.