Texas Employers' Insurance Ass'n v. Remy

752 S.W.2d 617, 1988 Tex. App. LEXIS 1764, 1988 WL 74452
CourtCourt of Appeals of Texas
DecidedMay 12, 1988
DocketNo. 2-86-112-CV
StatusPublished
Cited by1 cases

This text of 752 S.W.2d 617 (Texas Employers' Insurance Ass'n v. Remy) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Texas Employers' Insurance Ass'n v. Remy, 752 S.W.2d 617, 1988 Tex. App. LEXIS 1764, 1988 WL 74452 (Tex. Ct. App. 1988).

Opinion

OPINION

KELTNER, Justice.

Texas Employers’ Insurance Association (TEIA), brings this appeal from the trial court’s judgment setting aside a worker’s compensation compromise settlement agreement that the company entered into with George Remy, Jr. (Remy), an injured worker.

In answers to special issues, the jury found facts sufficient to allow rescission on theories of both constructive fraud and mutual mistake. The trial court entered judgment for rescission based ón both theories. In the judgment, the trial court reflected that it partially granted a motion for judgment non obstante veredicto and disregarded the jury’s finding that one of the treating physicians was an agent of TEIA, because there was no evidence to support that answer.

TEIA asserts that compromise settlement agreements may not be rescinded on the grounds of mutual mistake as a matter of law. On the other hand, Remy contends the trial court erred in granting TEIA’s motion to disregard the jury’s answer to special issue ten. We will not consider TEIA’s claim regarding mutual mistake. Instead, we reverse that part of the trial court’s judgment which disregarded the jury’s answer to special issue ten and affirm judgment for rescission based on constructive fraud in Remy’s favor.

Remy was injured when he fell from a scaffolding at his work place. He was initially taken to Wichita Falls General Hospital and released after x-rays were taken. Initially, Remy’s complaints were of his low back. When his back condition continued to deteriorate, he approached [619]*619TEIA, his employer’s worker’s compensation carrier, for permission to see another physician.

Remy selected Dr. Robert Pace, Jr., an orthopedic surgeon in Wichita Falls. A TEIA adjuster gave Remy a slip authorizing Dr. Pace to examine Remy and report his condition back to the insurance company. The slip did not specifically authorize Pace to treat Remy’s condition.

Despite the language on the slip, Dr. Pace did treat Remy over a period of six months. During the period of treatment, Remy's objective and subjective symptoms worsened. A myelogram and CAT scan were performed. While the myelogram was negative, Dr. Pace diagnosed two bulging disks in Remy’s low back. Dr. Pace’s records were sent both to TEIA and to Remy’s attorney. During the period of treatment, TEIA paid weekly benefits under the worker’s compensation act. Nonetheless, settlement negotiations continued between Remy’s attorney and TEIA. Immediately prior to a pre-hearing conference, TEIA requested a “special report” from Dr. Pace. Dr. Pace’s report reflected that Remy did not need surgery as of the day of the report. However, Dr. Pace reiterated that, at the worse, Remy could have two bulging disks in his low back.

As a result, both parties agreed to a settlement on the assumption that Remy had sustained a typical low back strain with only a possibility of future low back surgery. Based on this assumption, the parties agreed to a contingent escrow amount, if Remy eventually required low back surgery.

Unfortunately, Remy’s condition rapidly deteriorated after the settlement. Six months later, Remy’s condition had digressed to a point that he was a virtual quadriplegic. Eventually, he was hospitalized for an operation on the spinal cord in his neck.

At trial, one physician testified and the reports of three others were admitted into evidence. In their opinion, the neurological loss which caused Remy’s quadriplegia was caused by damage to the spinal cord in the neck. It was the opinion of these same doctors that the damage to the spinal cord was caused by the on-the-job injury. Specifically, Dr. Herbert Leiman testified that Dr. Pace had misdiagnosed Remy’s condition. However, Dr. Leiman further testified that he could not fault Dr. Pace because only the progression of Remy’s problem would have led to the correct diagnosis. In fact, late in his treatment, Dr. Pace had requested a neurological consultation because of Remy’s progressive weakness and spasticity after the settlement. After undergoing extensive neck surgery, Remy brought suit to set aside the compromise settlement agreement and sought findings that he was totally and permanently disabled as a result of his on-the-job injury.

In answer to special issues, the jury found (1) that Remy was totally and permanently disabled as a result of the injury; (2) both parties entered into the settlement agreement based on representations made by Dr. Pace; (3) the representations by Dr. Pace were false; (4) Remy relied on the representations and would not have entered into the compromise settlement agreement absent the representations; (5) a mutual mistake of material fact was made at the time the compromise settlement agreement was executed because of the representations of Dr. Pace; and (6) Dr. Pace was acting on behalf of TEIA when he made the incorrect representations regarding Remy’s injury.

Both Remy and TEIA appeal from the trial court’s judgment. TEIA contends that compromise settlement agreements may not be set aside for mutual mistake as a matter of law. However, we do not reach that contention because we find the court erred in granting the motion to disregard the jury’s answer that Dr. Pace was acting on behalf of TEIA when making the representations. As a result, Remy was entitled to a judgment of rescission based on constructive fraud.

A compromise settlement agreement may be set aside for constructive fraud upon a showing of: (1) misrepresentations made to the worker about his or her injuries; (2) made by the employer, worker’s compensation carrier or an agent of [620]*620either; (3) reliance by the worker on the misrepresentations; and (4) a meritorious claim for more compensation than was paid. Rodriguez v. American Home Assur. Co., 735 S.W.2d 241, 242 (Tex.1987).

All of these elements were found by the jury. However, the jury’s finding that Dr. Pace was acting on behalf of TEIA when making the representations was set aside because of the trial court’s opinion that there was no evidence to support the finding. Remy attacks this part of the judgment.

The issue of the character and nature of evidence to support a finding that a doctor was an agent of an insurance carrier was recently decided by the Texas Supreme Court. Rodriguez, 735 S.W.2d at 242. In that case, the supreme court noted that there are several ways in which a doctor may be proved to be an agent of an insurance carrier, stating:

There are several ways for a doctor to become a carrier or employer’s agent. One way for an agency relationship to come about is if the carrier or employer recommends the physician.
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Another way that a physician can become an agent, however, is if the doctor’s reports are used by the carrier or employer in reaching the settlement.

Id. at 242 (emphasis added).

The Rodriguez case was cited after the judgment in the instant case was rendered. As a result, the trial court did not have the benefit of the supreme court’s analysis. However, in applying the law in Rodriguez to the facts in this case, it is obvious that there is ample evidence to support the jury’s finding that Dr. Pace was acting on behalf of TEIA when he made the representations.

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Cite This Page — Counsel Stack

Bluebook (online)
752 S.W.2d 617, 1988 Tex. App. LEXIS 1764, 1988 WL 74452, Counsel Stack Legal Research, https://law.counselstack.com/opinion/texas-employers-insurance-assn-v-remy-texapp-1988.