Liberty Mutual Insurance Company v. Ricky Adcock , 412 S.W.3d 492 ( 2013 )

IN THE SUPREME COURT OF TEXAS
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NO . 11-0934
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LIBERTY MUTUAL INSURANCE COMPANY, PETITIONER,
v.
RICKY ADCOCK, RESPONDENT
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ON PETITION FOR REVIEW FROM THE
COURT OF APPEALS FOR THE SECOND DISTRICT OF TEXAS
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JUSTICE GREEN , joined by CHIEF JUSTICE JEFFERSON and JUSTICE HECHT , dissenting.
The Court today holds that, once awarded, lifetime income benefits (LIBs) are irrevocable
and must be paid for the rest of a claimant’s life, even when it can be established at a later date that
the claimant’s injury is no longer total and permanent. While the Court’s rationale makes sense for
anatomical losses, it defies reason for functional losses. Advances in medicine and science offer
previously unforeseen therapies and treatments that enable some persons who once seemed
permanently injured to regain functionality. The Court says none of this matters, that the Legislature
intended to foreclose any reopening of a finding of total and permanent loss of use, even when
evidence would show that the claimant has recovered. Because I read the Labor Code’s scheme
governing income benefits as giving the Texas Department of Insurance, Division of Workers’
Compensation (the Division) jurisdiction to ensure that only claimants who meet the statutory
eligibility criteria receive LIBs, I respectfully dissent.
I. Background
In March 1991, Ricky Adcock sustained on-the-job injuries to his right foot and his right
hand. Six years later, he was awarded LIBs. Liberty Mutual, the worker’s compensation insurance
carrier for Adcock’s employer, did not appeal that decision to the trial court and began issuing
payments pursuant to the order.1 More than ten years later, Liberty Mutual sought a new hearing,
asserting that it had received video evidence of Adcock walking and handling objects, indicating that
his condition had improved enough that he no longer had total and permanent functional loss of his
ankle and hand, and he was therefore not entitled to LIBs. At a contested case hearing, the parties
agreed on the following questions to be certified to the hearing officer:
(1) Is [Adcock] entitled to lifetime income benefits (LIBs) as of this date based on
total and permanent loss of use of his hands and legs?
(2) As a result of the decision and order of Appeals Panel in Appeal No. 970981,
does the Division have jurisdiction to determine continuing entitlement to lifetime
income benefits (LIBs)?
The video evidence presented at the hearing clearly demonstrated that, at one time, Adcock could
walk and handle objects. The hearing officer issued its decision and order, finding that it had
jurisdiction to hear the case but that, despite the video evidence, Adcock remained entitled to LIBs.
The appeals panel affirmed. Adcock appealed to the district court, arguing that the Division lacked
1
If a party disputes the appeals panel decision, it “may seek judicial review by filing suit not later than the 45th
day after the date on which the [D]ivision mailed the party the decision of the appeals panel.” T EX . L AB . C O DE
§ 410.252(a). “A decision of the appeals panel regarding benefits is final in the absence of a timely appeal for judicial
review.” Id. § 410.205(a).
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jurisdiction to hear the case under section 408.161 of the Labor Code, and asserting res judicata and
collateral estoppel.
II. The Division’s Jurisdiction
The Court holds that jurisdiction to determine continuing eligibility for LIBs cannot be found
in the plain language of the Act, and therefore our inquiry can go no further. I disagree. When
construing a statute, “[w]e rely on the plain meaning of the text as expressing legislative intent unless
a different meaning is . . . apparent from the context.” Tex. Lottery Comm’n v. First State Bank of
DeQueen, 325 S.W.3d 628, 635 (Tex. 2010). Additionally, we are not constrained to the text of the
statute if “the plain meaning leads to absurd or nonsensical results.” Molinet v. Kimbrell, 356
S.W.3d 407, 411 (Tex. 2011). I believe that disallowing the Division jurisdiction in these cases will
lead to absurd and nonsensical results, which the Legislature did not intend.
A. The Statute Indicates Jurisdiction to Consider Continuing Eligibility to Receive LIBs
Section 408.161 of the Texas Labor Code provides that “[l]ifetime income benefits are paid
until the death of the employee” when an impairment qualifies under the statute. TEX . LAB. CODE
§ 408.161(a). Additionally, “the total and permanent loss of use of a body part is the loss of that
body part” for purposes of entitlement to LIBs. Id. § 408.161(b). The Division is charged with
reviewing an employee’s condition and awarding LIBs when the claimant is entitled to them. See
id. § 402.00114 (providing that “the division shall: (1) regulate and administer the business of
workers’ compensation in this state; and (2) ensure that this title and other laws regarding workers’
compensation are executed”); see also id. § 408.161 (establishing the requirements for entitlement
to LIBs). As the Court explains, administrative agencies are creatures of the Legislature and,
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therefore, may exercise only the powers the Legislature confers upon them in clear and express
language. ___ S.W.3d at ___; Tex. Natural Res. Conservation Comm’n v. Lakeshore Util. Co., 164
S.W.3d 368, 377–78 (Tex. 2005). As the Court also recognizes, however, “[w]hen the Legislature
expressly confers power on an agency, it also impliedly intends that the agency have whatever
powers are reasonably necessary to fulfill its express functions or duties.” Lakeshore Util. Co., 164
S.W.3d at 378. “In deciding whether an agency has acted within its powers, a court should also
determine whether an agency’s power is implied in the statute.” Id. at 377–78 (emphasis added).
We recently held in American Zurich Insurance Co. v. Samudio, 370 S.W.3d 363 (Tex. 2012), that
the trial court had the power to remand an impairment rating decision to the Division even though
“the statute [was] silent as to the court’s power to remand” because the “regulatory scheme as a
whole illustrate[d]” that was the Legislature’s intent. 370 S.W.3d at 368. Likewise, the overall
income benefit scheme indicates the Legislature’s intent for the Division to have jurisdiction to
consider continuing eligibility for LIBs.
We determine legislative intent by reading the statute as a whole and interpreting the
legislation to give effect to the entire act and not just its isolated portions. City of San Antonio v.
City of Boerne, 111 S.W.3d 22, 25 (Tex. 2003). We may be “aided by the interpretive context
provided by the surrounding statutory landscape.” LTTS Charter Sch., Inc. v. C2 Constr., Inc., 342
S.W.3d 73, 75 (Tex. 2011) (internal quotation marks omitted). The Division is charged with the
duty to “administer and operate the workers’ compensation system.” TEX . LAB. CODE § 402.001(b).
And it must “provide appropriate income benefits and medical benefits in a manner that is timely
and cost-effective.” Id. § 402.021(b)(3). As the Division is charged with the efficient and cost-
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effective administration of benefits, it follows that the Legislature intended that the Division have
the power to ensure that those who are permanently impaired receive just compensation and those
whose impairments are not permanent do not receive a windfall. Without the implied power to
determine continuing eligibility for LIBs, the Division could not ensure that income benefits are
administered in a cost-effective way. It is unlikely that the Legislature would require the workers’
compensation system and its carriers to allocate resources in such a way as to require the payment
of lifetime benefits, often for decades, to workers who do not meet the statutory criteria.
Although we held in Texas Mutual Insurance Co. v. Ruttiger, 381 S.W.3d 430 (Tex. 2012),
that a common law cause of action for breach of the duty of good faith and fair dealing against a
workers’ compensation insurance carrier “operate[d] outside the administrative processes and other
remedies in the Act and [was] in tension with . . . the Act’s goals or processes,” id. at 450, here an
action to determine continuing eligibility for LIBs is not in tension with the Act; rather, it is
consistent with the Legislature’s intent to give the Division the responsibility of properly
administering benefits. I agree with the Court that the Legislature has enacted a comprehensive
scheme for workers’ compensation. ___ S.W.3d at ___. As discussed below, however, the
Legislature cannot and need not envision every circumstance that may arise in the workers’
compensation context. And the Court should not be required to order absurd results if the
Legislature happened to leave a particular circumstance unaddressed. See R.R. Comm’n v. Lone Star
Gas Co., 844 S.W.2d 679, 689 (Tex. 1992) (noting that requiring the Legislature to anticipate all
circumstances would defeat the purpose of delegation).
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As Adcock and the Court point out, other income benefits in the Act, such as supplemental
income benefits and temporary income benefits, have a cap on the length of time an employee may
receive benefits, while an award of LIBs does not. See ___ S.W.3d at ___ (citing TEX . LAB. CODE
§§ 408.0041(k), .011(16), .101, .1415(a), .147(a), .149(a), .151(b)). Adcock and the Court argue this
is significant and indicates the Legislature’s intent that LIBs be awarded until the claimant dies,
regardless of whether his condition may have improved. But the Legislature’s use of “lifetime” does
not mean there can be no cap; rather, it denotes the maximum possible duration of the benefit—an
employee is eligible to receive up to a lifetime’s worth of benefits, but he is entitled to those benefits
only if he meets the statutory condition. Section 408.161 provides that LIBs “are to be paid until the
death of the employee for” the total and permanent loss, or loss of use, of statutorily specified body
parts. TEX . LAB. CODE § 408.161(a) (emphasis added). The word “for” limits the required payment
of LIBs, thus conditioning the entitlement to LIBs upon a total and permanent loss of, or loss of use
of, those body parts. Id. § 408.161(a), (b). As long as an employee is still entitled to the LIBs by
virtue of his condition, the award is indefinite. So, while the Legislature did not expressly provide
for a review process of a grant of LIBs, the plain language of the statute signals the Legislature’s
intent to allow the Division to ensure that LIBs are paid only to those entitled to them and that those
entitled to them are actually receiving the benefits.
The Court argues that because the provisions governing death income benefits (DIBs)—a
form of permanent benefit that is paid to a deceased employee’s beneficiaries until the occurrence
of a specified event—contain no procedure for ensuring continuing eligibility, LIBs must likewise
be paid in perpetuity with no mechanism for ensuring continuing eligibility. See ___ S.W.3d at ___
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(citing TEX . LAB. CODE §§ 408.181(a), .181(d), .182, .183). But the Court misses a critical
difference—death is permanent; loss of use may be, but only time will tell. DIBs are paid until
triggering events that are sure to occur—either beneficiaries will reach a certain age, or they will die,
for example. See TEX . LAB. CODE § 408.183. LIBs for anatomical losses work the same way—they
are permanent, even when a claimant uses a prosthesis and is thus fully functional. LIBs for
functional losses such as Adcock’s are different, however. They are paid “for” the total and
permanent loss of use of certain body parts—something that lacks the certainty of death and
amputations.2
The Court holds, and I agree, that the Division has jurisdiction to later consider a claimant’s
eligibility for LIBs when LIBs have previously been denied. See ___ S.W.3d at ___. Just as the Act
must be construed to impliedly allow an injured employee to subsequently establish eligibility for
LIBs based upon a change of condition after LIBs were denied, the Act should also be construed to
impliedly allow an insurance carrier to establish, based upon a change of condition, that eligibility
no longer exists for a claimant receiving LIBs. The Legislature must have intended an effective and
efficient exercise of the Division’s power to award LIBs, including the power to assess LIB
entitlement, whether previously awarded or previously denied, to determine if the statutory criteria
for receipt of benefits are satisfied. See Samudio, 370 S.W.3d at 368–69 (explaining that the overall
2
The Court also argues that because LIBs, like DIBs, can be paid through a non-assignable annuity, the
Legislature must intend that there be no mechanism other than the claimant’s death to end the payment of LIBs. ___
S.W .3d at ___. That the Legislature allows payment through an annuity for benefits that truly are permanent— DIBs and
LIBs for anatomical losses— however, does not mean that the Legislature intends to foreclose a process to ensure that
claimants receiving LIBs for functional losses are actually entitled to those benefits.
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regulatory scheme suggested that the trial court had the authority to remand to the Division despite
the lack of an express provision in the statute).
I recognize that we are to construe the Act liberally in favor of employees and not supply “by
implication restrictions on an employee’s rights.” In re Poly-Am., L.P., 262 S.W.3d 337, 350 (Tex.
2008) (orig. proceeding) (quoting Kroger Co. v. Keng, 23 S.W.3d 347, 349 (Tex. 2000)). However,
the Legislature could not have intended that “liberally construing the statute” would include
permitting employees who are not entitled to LIBs to receive them. Moreover, this interpretation
does not act as a “restriction” on an employee’s rights because an employee does not have a right to
LIBs unless his or her injury qualifies under the statute. A contrary interpretation of section 408.161
would lead to nonsensical results. See Kimbrell, 356 S.W.3d at 411.
The Court holds that the words “total and permanent” and “death” foreclose the Division
from evaluating a claimant’s continuing eligibility to receive LIBs. ___ S.W.3d at ___, ___. But
the determination that an injury is permanent can be “nothing more than a prediction” that the
condition will continue indefinitely. Hartford Accident & Indem. Co. v. McCardell, 369 S.W.2d
331, 338 (Tex. 1963), superseded by rule on other grounds as recognized in Bay Area Healthcare
Grp., Ltd. v. McShane, 239 S.W.3d 231, 235 (Tex. 2007); cf. Schneider Nat’l Carriers, Inc. v. Bates,
147 S.W.3d 264, 272 (Tex. 2004) (defining a permanent nuisance as an activity which is presumed
to continue indefinitely). We have explained that the “injuries enumerated in section 408.161 all
result in impairments,” Ins. Co. of State of Pa. v. Muro, 347 S.W.3d 268, 275 (Tex. 2011), and
“impairment” is defined in the Act to include an injury that “is reasonably presumed to be
permanent,” and therefore may change at a later time. TEX . LAB. CODE § 401.011(23)
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(“‘Impairment’ means any anatomic or functional abnormality or loss existing after maximum
medical improvement that results from a compensable injury and is reasonably presumed to be
permanent.”). Although LIBs are awarded on a presumption that an impairment will continue
indefinitely, with modern medicine and science we cannot preclude the possibility that a functional
impairment may improve. The workers’ compensation system and the individual carrier should not
have to continue to pay LIBs in the rare and fortunate event that a LIB claimant’s condition improves
and the claimant no longer has total and permanent loss of use. I agree with Liberty Mutual and the
Division that the Division must have jurisdiction to determine a claimant’s continuing eligibility for
LIBs when there is evidence that his or her impairments are no longer total and permanent.
B. The Division’s Interpretation of the Statute Is Entitled to Serious Consideration
If a statute is ambiguous, “[c]onstruction of [that] statute by the administrative agency
charged with its enforcement is entitled to serious consideration, so long as the construction is
reasonable and does not contradict the plain language of the statute.” Mid-Century Ins. Co. of Tex.
v. Ademaj, 243 S.W.3d 618, 623 (Tex. 2007) (internal quotation marks and citation omitted); see
R.R. Comm’n. v. Tex. Citizens for a Safe Future & Clean Water, 336 S.W.3d 619, 624 (Tex. 2011)
(“We have stated this principle in differing ways, but our opinions consistently state that we should
grant an administrative agency’s interpretation of a statute it is charged with enforcing some
deference.”). In this case, both the hearing officer and the appeals panel held that the Division had
jurisdiction to consider continuing eligibility to receive LIBs under section 408.161, and the Division
has taken that position throughout these proceedings. The appeals panel reached a similar result in
a decision the parties refer to as Deep East Texas Self Insurance Fund, Appeals Panel No. 020432-s,
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2002 WL 971079 (Tex. Workers’ Comp. Comm’n Apr. 10, 2002), in which an insurance carrier
challenged the claimant’s continuing entitlement to LIBs and sought to show that the claimant
fraudulently obtained the award. Id. at *1–2. The appeals panel held that the Division had
jurisdiction to consider a claimant’s continuing entitlement to LIBs, but the court of appeals in this
case disagreed with the appeals panel’s reasoning in Deep East Texas, concluding that because the
insurance company was claiming fraud, it should have sought a remedy under section 415.031. 353
S.W.3d 248, 252 (Tex. App.—Fort Worth 2011, pet. granted); see TEX . LAB. CODE § 415.031
(allowing any person to initiate administrative violation proceedings). Unlike Deep East Texas,
however, Liberty Mutual does not contend that Adcock obtained his LIBs by fraud; it merely
challenges his continuing eligibility for LIBs. As I have discussed, it is reasonable and does not
contradict the plain language of the statute to construe section 408.161 as impliedly allowing the
Division to have jurisdiction to determine eligibility for LIBs. Therefore, I see no reason that the
Division’s construction of the Act as conferring jurisdiction to determine Adcock’s continuing
eligibly for LIBs should not be afforded serious consideration.
The Court asserts that the Legislature knows how to provide for review of income benefit
determinations, as it has done with temporary income benefits, and the lack of an express review
provision in section 408.161 indicates the Legislature’s intent to prohibit the Division from
considering continuing eligibility to receive LIBs. ___ S.W.3d at ___. However, “[t]he Legislature
is not required to set forth in detail all the provisions necessary to govern the agency in the
performance of its functions.” Lone Star Gas Co., 844 S.W.2d at 689 (quoting State v. Tex. Mun.
Power Agency, 565 S.W.2d 258, 273 (Tex. Civ. App.—Houston [1st Dist.] 1978, writ dism’d))
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(internal quotation marks omitted). Liberty Mutual asserted at oral argument that typically in LIB
cases the functional loss of use of an appendage worsens over time, so a determination of a
claimant’s continuing eligibility for LIBs is not necessary. Just because the Legislature did not
expressly provide for this unusual situation does not mean that it did not intend for the Division to
possess the power to carry out its duties to effectively distribute workers’ compensation benefits.
Cf. Samudio, 370 S.W.3d at 368–69 (explaining that, despite the lack of an express provision in the
Workers’ Compensation Act, trial courts nevertheless have the authority to remand cases to the
Division as evinced by the overall statutory scheme).
As the Court points out, article 8306, section 12d of the former Workers’ Compensation Act
gave the reviewing commission power “to review any award or order, ending, diminishing or
increasing compensation previously awarded” based on “a change of condition, mistake or fraud,”
a provision that is absent from the current Act. Act of May 20, 1931, 42d Leg., R.S., ch. 155, § 1,
art. 8306, 1931 Tex. Gen. Laws 260, 260–61, repealed by Act of Dec. 13, 1989, 71st Leg., 2d C.S.,
ch. 1, § 16.01(7), art. 8306, 1989 Tex. Gen. Laws 114, 114. The current Act provides for specific
review within each particular type of benefit. See 353 S.W.3d at 250 (explaining the review systems
for supplemental and temporary income benefits). The absence of a broad review provision does not
necessarily indicate the Legislature’s intent to deprive the Division of jurisdiction, as the Court
contends. While the Legislature’s omission of a provision from an old statute to a new may signal
an intent to change the law, see Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 443 (Tex.
2009), it may also signal a change in the statutory scheme, as is the case here. See Jones v. Fowler,
969 S.W.2d 429, 432–33 (Tex. 1998) (holding that the Legislature did not intend the deletion of a
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statutory provision in the Family Code to be a substantive change in light of changes to the entire
statutory scheme). Under the former statute, benefits were paid “predictively,” meaning that they
were set “at the time of adjudication based on a prediction of the injury’s future impact on
employment.” Tex. Workers’ Comp. Comm’n v. Garcia, 893 S.W.2d 504, 516 (Tex. 1995). The
current Act instead pays long-term benefits retrospectively, where “benefits are adjusted periodically
over time based on actual lost wages for that period.” Id. The Legislature did not merely amend the
former statute and deliberately leave out the review provision; it significantly overhauled the entire
workers’ compensation system, including provisions for how claims are evaluated and benefits are
awarded. See id. at 513. A difference in language, therefore, is less indicative of intent in this
circumstance. I recognize that the Legislature knows how to provide for review, as it did so with the
other compensation schemes. See 353 S.W.3d at 249–50. It follows then that the Legislature also
knows how to expressly prohibit the Division from considering continuing eligibility for LIBs. It
did not do so here. I believe that the Legislature intended for the Division to have jurisdiction to
determine continuing eligibility for an award of LIBs.
The Court characterizes the issue in this case as one of re-opening a previous LIB
adjudication. ___ S.W.3d ___, ___. I view Liberty Mutual’s claims as seeking a new determination
of Adcock’s continuing eligibility to LIBs. As a new claim, as opposed to an appeal of the original
LIB award, the Division’s process for determining a claimant’s continuing eligibility for LIBs should
be the same as an original determination to grant or deny benefits. A claimant or insurance carrier
may request a benefit review conference by giving notice to the other parties after attempting to
resolve the dispute. See TEX . LAB. CODE §§ 410.023–.025; 28 TEX . ADMIN . CODE § 141.1. If the
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parties cannot resolve their dispute at the benefit review conference or arbitration, the parties may
proceed to a contested case hearing, where a Division hearing officer hears the dispute and makes
a record of the proceedings. See TEX . LAB. CODE § 410.151. The parties may then appeal that
decision to the Division’s appeals panel. See id. § 410.202. Further, the Act provides the Division
with the power to monitor carrier actions. See id. § 414.002(a). It lists numerous actions that
constitute administrative violations by an insurance carrier, including a carrier’s contest of a claim
to benefits when evidence clearly indicates liability. See id. § 415.002. The Act allows for
sanctioning and penalties when carriers violate such provisions of the Act, and therefore guards
against potential harassing actions by carriers against claimants receiving LIBs. See id.
§ 415.021(a).3 Because the Act already provides a procedure for contesting a claimant’s current
eligibility to benefits, there was no need for the Legislature to include a separate provision in the
statute.
III. Conclusion
Section 408.161 awards LIBs for functional impairments that equate to a total and permanent
loss of body parts and other serious life-altering injuries. It is impossible for the Division or anyone
else to know whether loss of use will actually be total and permanent. When, by good fortune or
advances in medical science, a claimant’s impairments improve so that he no longer meets the
3
Although not raised by the parties, I do not believe that section 410.209 of the Labor Code, which provides
for reimbursement of funds to an insurance carrier who has overpaid a claimant, applies in cases such as this. See id.
§ 410.209. Liberty Mutual and the Division do not contend that Adcock was not entitled to LIBs in 1997, and thus they
are not arguing that the Division should “revers[e] or modif[y]” that decision as is required to trigger potential
reimbursement. See id. Rather, I view this is an entirely new determination of a claimant’s current entitlement to LIBs
and not an appeal of the original grant of LIBs.
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statutory eligibility criteria for LIBs, he should not receive a windfall, as the Court would hold,
merely because the Legislature failed to provide for this unique circumstance. Surely the Legislature
did not intent such a nonsensical result. I would hold that the Division, which is charged with the
effective administration of income benefits, has jurisdiction to consider a claimant’s continuing
eligibility to receive LIBs. I respectfully dissent.
_______________________________________
Paul W. Green
Justice
OPINION DELIVERED: August 30, 2013
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