Texas Workers' Compensation Commission The Subsequent Injury Fund And Leonard W. Riley, Jr. v. Continental Casualty Company

• Court: Court of Appeals of Texas
• Decided: August 8, 2002
• Docket: 03-01-00510-CV
• Status: Published

Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-01-00510-CV

Texas Workers = Compensation Commission; The Subsequent Injury Fund; and Leonard W. Riley, Jr., Appellants

v.

Continental Casualty Company, Appellee

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 98TH JUDICIAL DISTRICT NO. 99-13797, HONORABLE DARLENE BYRNE, JUDGE PRESIDING

Continental Casualty Company filed this declaratory judgment action1 seeking an

interpretation of provisions of the Texas Workers= Compensation Act against the Texas Workers=

Compensation Commission (the ACommission@) and the Subsequent Injury Fund (the AFund@) (collectively,

the ACommission@).2 This case involves a dispute between Continental and the Commission, which is

charged with administering the state workers= compensation fund, over the interpretation of statutory

provisions requiring the Commission to reimburse insurers for benefits paid to claimants pursuant to the

Commission=s interlocutory orders. The Commission interpreted the statute as containing an exception to

the reimbursement requirement. When the Commission refused to reimburse Continental, it judicially

1 Continental filed this suit based, in part, on section 37.004 of the Texas Civil Practices and Remedies Code. See Tex. Civ. Prac. & Rem. Code Ann. ' 37.004(a) (West 1997). 2 Leonard W. Riley, Jr. is executive director of the Commission and was sued in his official capacity. challenged the Commission=s statutory interpretation of the Act. The district court granted a summary

judgment in favor of Continental and declared that the statute contained no such exception and ordered

reimbursement. The Commission appeals. We will affirm the district court=s judgment.

BACKGROUND

This particular dispute arises out of an administrative proceeding at the Commission

between Continental and Elisa Smith involving the compensability of a lumbar spine injury Smith sustained.

A contested-case hearing officer found that the back injury was compensable. A Commission appeals

panel affirmed that decision. At each stage of the administrative process, Continental paid to Smith the

benefits required by the Commission=s interlocutory orders. Finally, Continental appealed the appeals

panel=s decision to a Harris County district court, which found, after a trial on the merits, that Smith=s back

injury was not compensable.

When the district court=s judgment reversing the Commission=s interlocutory decisions

became final, Continental sought reimbursement from the Fund pursuant to section 410.205(c) of the Texas

Labor Code, the Texas Workers= Compensation Act (the AAct@). The Fund reimbursed only $8,012.44 of

the $42,107.92 that Continental paid to Smith. The Fund refused to pay $34,095.48 of the benefits paid

by Continental to Smith because that amount had been paid during the stage of the administrative

proceeding between the contested-case decision and the appeals panel decision. The Fund=s refusal was

based on the Commission=s interpretation of the pre-1999 version of Chapter 410 of the Act.3 The

3 See Act approved May 24, 1993, 73d Leg., R.S., ch. 269, ' 1, 1993 Tex. Gen. Laws 987, 1202, repealed by Act of May 19, 1999, 76th Leg., R.S., ch. 955, ' 2, 1999 Tex. Gen. Laws 3696, 3697

2 Commission interprets that version of the Act as having a Agap@ in its reimbursement provisions between the

contested-case hearing decision and the appeals panel decision. Continental paid to Smith $34,095.48 of

benefits during this Agap.@ Therefore, the Fund concluded, it was not required to reimburse that portion of

Continental=s payments to Smith.

Continental sued for a judicial interpretation of its rights to reimbursement under the Act.

The district court below granted Continental=s motion for summary judgment and found that the pre-1999

version of the Act did not contain a reimbursement Agap.@ The court ordered the Fund to reimburse

Continental the total amount it paid to Smith. The Commission now appeals.

DISCUSSION

Both the procedural posture and the substance of this case dictate that we review the

decision de novo. Summary judgment is available where there are no genuine issues of material fact and the

movant is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c). Therefore, summary judgments

are subject to de novo review. Vanliner Ins. Co. v. Texas Workers= Comp. Comm=n, 999 S.W.2d 575,

(formerly Tex. Lab. Code Ann. ' 410.032(b), since amended); Act approved May 24, 1993, 73d Leg., R.S., ch. 269, ' 1, 1993 Tex. Gen. Laws 987, 1209, repealed by Act of May 19, 1999, 76th Leg., R.S., ch. 955, ' 4, 1999 Tex. Gen. Laws 3696, 3697 (formerly Tex. Lab. Code Ann. ' 410.205(c)). The payments in this case were all made prior to the effective date of the 1999 amendments to the Act. Thus, former sections 410.032(b) and 410.205(c) control the issues in this case.

3 577 (Tex. App.CAustin 1999, no pet.). Interpreting statutes is a legal matter also subject to de novo

review. Bragg v. Edwards Aquifer Auth., 71 S.W.3d 729, 734 (Tex. 2002).

The Commission raises two issues on appeal: (1) whether the trial court had jurisdiction to

adjudicate the matter because Continental failed to first seek an administrative remedy, and (2) whether the

trial court erred in interpreting the statute and granting summary judgment in favor of Continental. We

address the jurisdictional challenge first.

I. JURISDICTION

The Commission challenges the district court=s jurisdiction to decide this case. It argues that

Continental was obliged to first contest the Commissioner=s decision to refuse reimbursement at the

Commission level through administrative proceedings. Because Continental failed to exhaust its

administrative remedies, the Commission argues, the district court lacked subject matter jurisdiction over the

reimbursement claim. This Court has previously held that an insurer, refused reimbursement by the

Commission under the pre-1999 version of the Act, may seek judicial relief through a direct declaratory

judgment action. Everest Nat=l Ins. Co. v. Texas Workers= Comp. Comm=n, No. 03-01-00631-CV, slip

op. at 13-14, 2002 Tex. App. LEXIS 4464, at *19 (Tex. App.CAustin June 21, 2002, no pet. h.); Texas

Workers= Comp. Comm=n v. Texas Builders Ins. Co., 994 S.W.2d 902, 907, 909 (Tex. App.CAustin

1999, pet. denied). The Commission=s jurisdictional challenge is overruled.

II. STATUTORY INTERPRETATION

4 To determine whether the district court=s interpretation of the Act was correct, we begin

with rules of statutory construction, or textual aids. Determining legislative intent is the overriding goal of

statutory interpretation. Continental Cas. Co. v. Downs, 45 Tex. Sup. Ct. J. 755, 756, 2002 Tex.

LEXIS 73, at *4 (June 6, 2002). In order to ascertain legislative intent, we first look to the plain and

common meaning of the words used by the legislature. Tex. Gov=t Code Ann. ' 311.011 (West 1998);

Kroger Co. v. Keng, 23 S.W.3d 327, 349 (Tex. 2000); Texas Builders Ins. Co., 994 S.W.2d at 908.

Unless a statute is ambiguous, courts abide by the clear language of the statute and enforce it as written.

RepublicBank Dallas, N.A. v. Interkal, Inc., 691 S.W.2d 605, 607 (Tex. 1985).

Statutes are interpreted by considering the entire statute, not just disputed provisions.

Thomas v. Cornyn, 71 S.W.3d 473, 481 (Tex. App.CAustin 2002, no pet.). Disputed provisions are to

be considered in context, not in isolation. See Fitzgerald v. Advanced Spine Fixation Sys., 996 S.W.2d

864, 866 (Tex. 1999). Courts consider such things as the circumstances under which the statute was

enacted, former statutory provisions on the same or similar subjects, and the consequences of a particular

construction when interpreting statutes. Keng, 23 S.W.3d at 349. We do not give one provision an

interpretation that is inconsistent with the other provisions of the act. Id.

The underlying object of a statute must inform a court=s interpretation and application of that

statute. See Tex. Gov=t Code Ann. ' 311.023 (West 1998). Statutes are to be interpreted and applied to

achieve, not frustrate, the object sought to be attained by the legislature in enacting the statute. See In re

J.A.B., 13 S.W.3d 813, 816 (Tex. App.CFort Worth 2000, no pet.). Courts must interpret a statute to

promote its underlying purpose and the policies it embodies. Northwestern Nat=l County Mut. Ins. Co. v.

5 Rodriguez, 18 S.W.3d 718, 721 (Tex. App.CSan Antonio 2000, pet. denied). When interpreting a

statute, we must be mindful of the consequences of a particular construction. Tex. Gov=t Code Ann. '

311.023; Korndorffer v. Baker, 976 S.W.2d 696, 700 (Tex. App.CHouston [1st Dist.] 1997, pet.

dism=d w.o.j.).

AConstruction of a statute by the agency charged with its enforcement is entitled to serious

consideration only if that construction is reasonable and does not contradict the statute=s plain language,@

Downs, 45 Tex. Sup. Ct. J. at 757, 2002 Tex. LEXIS 73, at *12-13, or is not Aclearly inconsistent with the

Legislature=s intent.@ Texas Water Comm=n v. Brushy Creek Mun. Util. Dist., 917 S.W.2d 19, 21 (Tex.

1996). An agency is not free to vary the terms of an unambiguous statute. Winnebago Indus., Inc. v.

Reneau, 990 S.W.2d 292, 294 (Tex. App.CAustin 1998, no pet.).

A. Reimbursement Gap is Contrary to Legislative Intent

A[T]he overarching policy of [the Act is to provide] benefits to injured workers as soon as is

practical.@ Lopez v. Texas Workers= Comp. Ins. Fund, 11 S.W.3d 490, 495 (Tex. App.CAustin 2000,

pet. denied). Indeed, assurance of the prompt payment of benefits under the Act is the primary

consideration, or quid pro quo, for employee participation in the workers= compensation system. See

Keng, 23 S.W.3d at 349-50. The Act requires courts to construe its terms liberally in favor of injured

workers; they should not adopt constructions that supply by implication restrictions on an injured worker=s

rights not found in the plain language of the statute. See id.

The reimbursement provisions at issue in this case ultimately do affect this carefully balanced

legislative scheme. The Act authorizes the Commission to order immediate benefit payments to be made to

6 claimants while their claims are being adjudicated at the Commission, and those payments must continue to

be made until either the Commission or a court orders otherwise. See Lopez, 11 S.W.3d at 495.

Requiring that benefits be paid while the claim is being adjudicated accomplishes the fundamental policy of

immediately paying benefits to injured claimants. See Lopez, 11 S.W.3d at 494-95; Texas Workers=

Comp. Comm=n v. City of Bridge City, 900 S.W.2d 411, 416 (Tex. App.CAustin 1995, writ denied).

Here, Continental was ordered to, and did, pay benefits to Smith at all three administrative levels: the

benefits review conference, the contested-case hearing, and finally pending the appeals panel=s decision.

To encourage compliance and make early payments more palatable to insurers, the

legislature created a system for reimbursement of benefits subsequently found not to have been owed.

These reimbursement provisions serve the objective of encouraging insurers to pay benefits quickly and Ato

err in favor of payment.@ Lopez, 11 S.W.3d at 495. Early benefits payments will be repaid if, at any point

during the adjudicative process, the benefits are found not to have been owed. See id. (interpreting post-

1999 version of Act).

The legislature placed a nondiscretionary duty on the Commission to reimburse insurers

from the Fund. At each point where the Act authorizes the Commission to order interlocutory payments to

claimants, the legislature created a corresponding duty of reimbursement on the Fund.4 Thus, a duty to

reimburse corresponded to each authorization to compel early payment of benefits. The 1999 amendments

4 Act approved May 24,1993, 73d Leg., R.S., ch. 269, ' 1, 1993 Tex. Gen. Laws 987, 1202 (repealed 1999) (formerly Tex. Lab. Code Ann. ' 410.032(b)); Act of Dec. 11, 1989, 71st Leg., 2d C.S., ch. 1, ' 6.42(e), 1989 Tex. Gen. Laws 1, 60 (repealed 1999) (formerly Tex. Lab. Code Ann. ' 410.205(c)).

7 changed this piecemeal structure of the Act and consolidated the duty to reimburse in one blanket provision.

See Tex. Lab. Code Ann. ' 410.209 (West Supp. 2002) (AThe . . . fund shall reimburse . . . for

overpayments of benefits made under an interlocutory order or decision if that order or decision is reversed

or modified . . . .@).5 The payments in this case, however, were made before the statutory amendment, so

the pre-1999 version of the Act controls this case.

B. History of the Dispute

The pre-1999 Act initially authorized interlocutory orders requiring payment of benefits at

the benefits review conference found in subchapter B of the Act.6 Texas Builders, 994 S.W.2d at 903.

Subchapter B deals with the informal benefit review stage of the process. Former section 410.032(b)

required reimbursement if the interlocutory order was subsequently changed at the next agency level, which

could be either a contested-case hearing or arbitration.

5 AThe amendments clarify that the legislature does not intend any gap in reimbursement.@ Everest Nat=l Ins. Co. v. Texas Workers= Comp. Comm=n, No. 03-01-00631-CV, slip op. at 13 n.6, 2002 Tex. App. LEXIS 4464, at *18 n.7 (Tex. App.CAustin June 21, 2002, no pet. h.). 6 Act approved May 24, 1993, 73d Leg., R.S., ch. 265, ' 1, 1993 Tex. Gen. Laws 987, 1202, repealed, Act of May 19, 1999, 76th Leg., R.S., ch. 955, ' 4, 1999 Tex. Gen. Laws 3696, 3697 (formerly section 410.032(b)).

8 The next authorization of interlocutory orders was found in subchapter E, which deals with

appeals (of contested case hearing decisions) to an administrative appeals panel. Section 410.205(b)

authorizes interlocutory orders for payment of benefits at this stage. The agency=s orders remain in effect

during the period while an appeals panel=s decision is appealed to the courts. Tex. Lab. Code Ann. '

410.205(b) (West Supp. 2002); see also Texas Builders, 994 S.W.2d at 904. Former section

410.205(c) likewise required reimbursement should a court subsequently overturn the appeals panel=s

decision.7

Disputes arose about whether reimbursement was required for amounts paid while a

contested-case hearing order was pending at the next level of the administrative process, the appeals panel.

See, e.g., Texas Builders, 994 S.W.2d at 902. Subchapter D of the pre-1999 Act, which addresses the

contested-case hearing stage, was silent as to both payment and reimbursement of benefits through the next

stage of the administrative process. Subchapter D did not specify whether immediate and continued

payment of any benefits found owing by the contested-case officer=s decision was required. A contested-

case hearing officer was simply authorized to issue a written decision determining Awhether benefits are

due.@ Nothing in subchapter D expressly mandated the payment of benefits. Nevertheless, the overall

purpose of the Act required that interlocutory decisions of a contested-case officer were immediately and

continually binding until modified or reversed. There was never a question about whether insurers were

7 Act of Dec. 11, 1989, 71st Leg., 2d C.S., ch. 1, ' 6.42(e), 1989 Tex. Gen. Laws 1, 60, (repealed 1999) (formerly Tex. Lab. Code Ann. ' 410.205(c)).

9 required to pay benefits while a claim was pending at the appeals panel level, but the Fund denied its

concomitant duty to reimburse payments made during this stage.

Although nothing in the structure, language, or policy of the Act justified it, the Commission

has for years interpreted the lack of explicit reimbursement language in subchapter D to mean that a Agap@

existed in the reimbursement provisions. The existence of the gap, the Commission concluded, meant that

benefits paid while a contested-case hearing order was pending before the appeals panel need not be

reimbursed.8 Based on its own interpretation of the Act, the Commission refuses to reimburse insurers for

amounts paid during this period. Consequently, the legislature amended the Act in 1999 to clarify its intent

that reimbursement be available for all payments made under any order or decision of the Commission. See

Tex. Lab. Code Ann. ' 410.209.

We hold that there is no gap in the reimbursement provisions of chapter 410 of the pre-

1999 Act. We hold that the Commission=s refusal to reimburse insurers for payments made during the

period between the contested-case hearing decision and the appeals panel=s decision is contrary to both the

language of the statute and the overriding purpose of the Act. See Texas Builders, 994 S.W.2d 910.

There is no language in the Act stating that the Commission is authorized to omit repaying benefits paid

8 See generally Texas Workers= Comp. Comm=n v. City of Bridge City, 900 S.W.2d 411 (Tex. App.CAustin 1995, writ denied) (involving insurer=s challenge to constitutionality of such interpretation, and ultimately holding that, assuming such statutory scheme, legislature=s choice not to require reimbursement at this stage would not be unconstitutional); see also Texas Workers= Comp. Comm=n v. Texas Builders Ins. Co., 994 S.W.2d 902 (Tex. App.CAustin 1999, pet. denied); St. Paul Fire & Marine Ins. Co. v. Texas Workers= Comp. Comm=n, 945 S.W.2d 886 (Tex. App.CAustin 1997, no pet.).

10 during this period.9 Had the legislature intended to treat payments and reimbursements differently during the

appeals panel stage, it could have explicitly said so.

A gap does not make sense in this statutory scheme. The legislature sought to encourage

participation in the workers= compensation system by employers, employees, and insurers; that objective is

frustrated if any of the participants risk forfeiture. There is no intent shown in the Act to make the

reimbursement provisions of chapter 410 a revenue-generating mechanism for the Fund.

The Commission=s reasoning unnecessarily truncates this chapter of the Act into a series of

disjointed steps instead of the integrated statutory scheme it was intended to be. Interlocutory orders to pay

benefits remain in effect until further order of the Commission or a court. See Lopez, 11 S.W.3d at 495.

We hold that a final decision, by either the Commission or a court, finding that certain benefits were not

owed thereby authorizes the reimbursement of any benefits paid pursuant to any interlocutory order of the

Commission.

C. Is Bridge City Stare Decisis for a Gap?

As authority for its position, the Commission cites this Court=s decision in City of Bridge

City, as recognizing and approving of the Commission=s interpretation of the Act. See City of Bridge City,

900 S.W.2d 411. The Commission has misconstrued that opinion. That case involved a constitutional

9 AA court [or an agency] may not write special exceptions into a statute so as to make it inapplicable under certain circumstances not mentioned in the statute.@ Public Util. Comm=n v. Cofer, 754 S.W.2d 121, 124 (Tex. 1988).

11 challenge to the Commission=s interpretation of the reimbursement scheme. The workers= compensation

insurer in that case challenged the unequal treatment of reimbursements, during the period between the

contested-case hearing decision and the appeals panel=s decision, in relation to the other stages of the

administrative process. Id. at 413. In deciding that case, this Court assumed, for the purposes of that

appeal, that the Athe statutory reimbursement provisions created a >gap= or interim period during which the

Fund could omit reimbursement.@ See Everest, slip op. at 12, 2002 Tex. App. LEXIS 4464, at *18.

This Court was not asked in City of Bridge City to address the propriety of the

Commission=s interpretation of the Act. See id. The issue posed in that case was whether a reimbursement

gap was unconstitutional. City of Bridge City, 900 S.W.2d at 413. We upheld the constitutionality of

such a scheme because it was rationally related to the state=s legitimate interest in regulating workplace

injuries and the legislature=s balancing of the interests of claimants and insurers. Id. at 416-17. City of

Bridge City is not authority for the proposition that the pre-1999 version of the Act creates a gap in the

Fund=s reimbursement obligation. Everest, slip op. at 13, 2002 Tex. App. LEXIS *18. In explaining our

decision, this Court in City of Bridge City said:

Apparently, these provisions are construed so that the carrier is not entitled to recover any overpayment made during the period between the date of the contested-case decision requiring payment and the date of the appeals-panel decision affirming that decision, even though the latter decision is reversed on judicial review. Threatened by administrative penalties if they do not pay benefits during the only period when reimbursement is not expressly secured by the statutory scheme, the [insurer] sued for declaratory judgment that the Act is unconstitutional.

12 City of Bridge City, 900 S.W.2d at 413 (emphasis added). A careful reading of the City of Bridge City

opinion leads inexorably to the conclusion that it was the Commission=s interpretation of the Act and refusal

to reimburse that created a de facto gap. In any event, City of Bridge City dealt with the issue of the

constitutionality of a particular statutory scheme. It does not bind this Court to accept the Commission=s

interpretation of the statute.

D. Does Amendment Imply a Prior Gap?

Lastly, the Commission argues that the fact that the legislature amended the Act in 1999 by

deleting sections 410.032(b) and 410.205(c) and adding section 410.209 to Aremove the gap@ is an

indication that the gap existed before the legislative action. The Commission=s argument is unconvincing. In

this instance, it is just as likely that the legislature acted to clarify its intent that no reimbursement gap existed.

It was the Commission that effectively created the Areimbursement gap@ controversy. See id. The

legislature=s amendment to chapter 410 of the Act is no authority for the Commission=s refusal to reimburse

insurers for payments made during the appeals panel stage of a case. The Commission acted beyond its

statutory authority in concluding otherwise.

CONCLUSION

For the reasons set forth above, we overrule the Commission=s issues on appeal and affirm

the judgment of the district court.

13 Mack Kidd, Justice

Before Justices Kidd, Yeakel and Patterson

Affirmed

Filed: August 8, 2002

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