American Home Assurance Co. v. Texas Workers' Compensation Commission and Christopher D. Huebner ( 2001 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

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NO. 03-00-00545-CV

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American Home Assurance Co., Appellant

v.

Texas Workers' Compensation Commission and Christopher D. Huebner, Appellees

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FROM THE DISTRICT COURT OF TRAVIS COUNTY, 53RD JUDICIAL DISTRICT NO. 99-14827, HONORABLE CHARLES F. CAMPBELL, JUDGE PRESIDING

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After the State Office of Administrative Hearings ("SOAH") preauthorized treatment to Christopher Huebner in a medical benefits dispute, American Home Assurance Co. ("American") sought judicial review of the administrative order by filing an action against the Texas Workers' Compensation Commission ("the Commission") and Huebner in district court. ⁽¹⁾ American appeals from a district court order granting the Commission's plea to the jurisdiction. Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(8) (West Supp. 2001). In two issues, American argues that it was entitled to judicial review arising from an inherent right based on due process under the United States and Texas Constitutions ⁽²⁾ and a statutory right, namely, section 2001.171 of the Administrative Procedure Act ("the APA"). Tex. Gov't Code Ann. § 2001.171 (West 2000). We reverse the district court judgment granting the Commission's plea to the jurisdiction.

Factual and Procedural Background

On December 9, 1996, Huebner was exposed to and inhaled vaporized chemicals while on the job. ⁽³⁾ Huebner later developed a medical condition known as chronic inflammatory demyelinating polyneuropathy. Huebner alleges that he discovered his injury on May 23, 1997.

In a matter presently pending in district court, American has contested Huebner's claim of a compensable injury.

The Center for Immune Environmental & Toxic Disorders requested pre-authorization from American to provide Huebner with weekly intravenous gamma globulin treatment for twelve weeks. After American refused to preauthorize such treatments, the Center filed a request with the Medical Review Division of the Commission for medical dispute resolution. The Medical Review Division ordered Huebner to undergo a medical examination with an independent physician who was chosen by the Commission. Because the independent physician disagreed with the Center's recommended course of treatment, the Medical Review Division did not order preauthorization of Huebner's treatments. Huebner appealed the Medical Review Division's decision to SOAH. The administrative law judge reversed the Medical Review Division's decision and ordered preauthorization of the treatments.

Seeking judicial review of this order, American filed suit in district court. The Commission raised its plea to the jurisdiction in its first amended answer, arguing that American had no inherent or statutory right to judicial review. After the supreme court issued its opinion in Continental Casualty Insurance Co. v. Functional Restoration Associates, American amended its petition. 19 S.W.3d 393 (Tex. 2000). The district court granted the Commission's plea to the jurisdiction. American appeals the district court judgment.

Standard of Review

A plea to the jurisdiction challenges the district court's authority to determine the subject matter of the cause of action. Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000); City of Austin v. L.S. Ranch, Ltd., 970 S.W.2d 750, 752 (Tex. App.--Austin 1998, no pet.). Subject matter jurisdiction raises a question of law, which we review de novo. See Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998).

The plaintiff bears the burden of pleading facts that show the district court has subject matter jurisdiction. Texas Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 446 (Tex. 1993). We examine a plaintiff's good faith factual allegations to determine whether the district court has jurisdiction. See Bland Indep. Sch. Dist., 34 S.W.3d at 554; Brannon v. Pacific Employers Ins. Co., 224 S.W.2d 466, 469 (Tex. 1949). Unless the face of the petition affirmatively demonstrates a lack of jurisdiction, the district court must liberally construe the allegations in the petition in favor of the plaintiff and in favor of jurisdiction. Texas Ass'n of Bus., 852 S.W.2d at 446; Peek v. Equipment Serv. Co., 779 S.W.2d 802, 804 (Tex. 1989). We must therefore determine whether American pleaded facts sufficient to allege that the district court had jurisdiction to review the administrative order.

DISCUSSION

Under Texas law, a plaintiff may seek judicial review of an administrative order in the following three instances: (1) a statute expressly provides for judicial review, (2) the order adversely affects a vested property right, or (3) the order violates some other constitutional right. Continental Cas. Ins. Co., 19 S.W.3d at 397; Stone v. Texas Liquor Control Bd., 417 S.W.2d 385, 385-86 (Tex. 1967).

In its first issue, American argues that it was entitled to judicial review based on its inherent right to due process under the United States and Texas Constitutions. See U.S. Const. amend. XIV, § 1; Tex. Const. art. I, § 19. ⁽⁴⁾ Specifically, American contends that the administrative order from SOAH requires American to pay for Huebner's treatments. American concludes that, because the order adversely affects its property interest in the monies owed for the preauthorized medical treatments, it has an inherent right to judicial review based on due process.

Relying in part on Chemical Bank & Trust Co. v. Falkner, 369 S.W.2d 427, 433 (Tex. 1963) and Brazosport Savings & Loan Ass'n v. American Savings & Loan Ass'n, 342 S.W.2d 747, 750 (Tex. 1961), this Court has previously stated that when some action by an administrative agency affects a vested property right, the affected party may invoke an inherent right of judicial review. Continental Cas. Ins. Co. v. Functional Restoration Assocs., 964 S.W.2d 776, 779 (Tex. App.--Austin 1998), rev'd on other grounds, 19 S.W.3d 393 (Tex. 2000). For a property right to vest, the supreme court has reasoned, "It must have become a title, legal or equitable, to the present or future enjoyment of property, or to the present or future enforcement of a demand, or a legal exemption from the demand of another." National Carloading Corp. v. Phoenix-El Paso Express, Inc., 176 S.W.2d 564, 570 (Tex. 1943).

In Continental Casualty, this Court examined whether a vested property interest existed in "the money that the Commission's hearing officer ordered Continental to pay . . . [the defendants]." Continental Cas. Ins. Co., 964 S.W.2d at 782. We concluded that the hearing officer's decision, which affirmed an administrative order authorizing medical treatment, did affect a vested property interest. Id.

In this case, an administrative order from SOAH preauthorized Huebner's treatments. Section 413.014(b) of the Texas Workers' Compensation Act states, "The insurance carrier is not liable for those specified treatments and services unless preauthorization is sought by the claimant or health care provider and either obtained from the insurance carrier or ordered by the commission." Tex. Lab. Code Ann. § 413.014(b) (West 1996). Like the order in Continental Casualty, the administrative order here imposed liability on American for the costs of Huebner's medical treatments. Given the procedural posture of this case, which prevents us from reaching the merits, the narrow issue before us is whether American has sufficiently alleged an inherent right to judicial review.

In its amended petition, American pleads that it "seeks judicial review of the Decision and Order of the State Office of Administrative Hearings . . . pursuant to Tex. Lab. Code Ann. §§ 410.255, 402.073 and Tex. Gov't Code Ann. § 2001.171." In listing the reasons the district court has jurisdiction to hear this matter, American asserts, "Plaintiff has an inherent right to judicial review under due process of law as provided in the Texas and United States Constitutions because the decision adversely affects Plaintiff's protected vested property interest in its money." American also addressed this assertion in its hearing brief in support of the court's jurisdiction, which further argued its right to substantive due process. This hearing brief was filed on the same day that the district court issued its order granting the plea to the jurisdiction.

Citing the supreme court's opinion in Continental Casualty Insurance Co. v. Functional Restoration Associates and this Court's opinion in Carrizales v. Texas Department of Protective & Regulatory Services, the Commission asserts that American was required to do more in its petition than merely track the statutory language of the APA and identify the alleged constitutional violation. Continental Cas. Ins. Co., 19 S.W.3d at 393; Carrizales v. Texas Dep't of Protective & Regulatory Servs., 5 S.W.3d 922 (Tex. App.--Austin 1999, pet. denied). Both opinions inform our analysis in this case.

In Continental Casualty, the Texas Supreme Court considered whether Continental was entitled to judicial review of a medical benefits decision by the Commission's Hearings Division. ⁽⁵⁾ Continental Cas. Ins. Co., 19 S.W.3d at 395. Although Continental argued that the administrative order affected a vested property right, its petition did not allege an inherent right to judicial review or a due process right. Id. at 404. The supreme court concluded that the district court properly granted the Commission's plea to the jurisdiction because Continental had failed to plead an inherent right to judicial review as a basis for jurisdiction. Id. at 404-05. In contrast, here, American's petition expressly alleges its inherent right to judicial review based on due process under the United States and Texas Constitutions.

In Carrizales, the appellant sought judicial review of an administrative order from SOAH that concluded he was guilty of neglect of a child. Carrizales, 5 S.W.3d at 923. On appeal, Carrizales asserted an inherent right to judicial review, arguing that the order deprived him "of his liberty interest in pursuing future employment opportunities in any field working with children." Id. at 924. To support this argument, Carrizales relied on the same language in his petition that he had used below to argue the APA provided a right to judicial review. Id. at 925. This Court held that Carrizales had waived the issue. Id. Unlike Carrizales, American does not rely on identical language to support two independent grounds for judicial review, one based on the APA and another based on due process.

The Commission also asserts, "After reviewing the pleadings and hearing the arguments of counsel, Judge Campbell decided that American's allegations were conclusory and did not go far enough to inform the trial court that American was asserting an independent constitutional claim apart from the statutory bases set forth in § 2001.174." We cannot discern the district court's reasons for granting the Commission's plea to the jurisdiction from the record before us. Rather than dispute that an inherent right to judicial review based on due process may exist here, the Commission complains solely that American's pleading is insufficient.

If a court can ascertain that a plaintiff's allegations cannot state a cause of action, even if amended, then the court can properly grant a plea to the jurisdiction. Bybee v. Firemen's Fund Ins. Co., 331 S.W.2d 910, 917 (Tex. 1960). When, instead, a plaintiff may be able to cure a jurisdictional defect by amending its pleadings, a court should not grant a plea to the jurisdiction without first allowing an opportunity to replead. Id.; see also Texas Ass'n of Bus., 852 S.W.2d at 446; Peek, 779 S.W.2d at 805. When a jurisdictional defect is curable, the true issue is one of sufficiency of pleading, not of jurisdiction. Bybee, 331 S.W.2d at 917.

In this case, the Commission did not file special exceptions to challenge the sufficiency of the allegations American first pleaded in its amended petition. ⁽⁶⁾ American asserts that it can cure any asserted deficiency. Because the issue here may be one of sufficiency of pleading, and not jurisdiction, American is entitled to an opportunity to replead. See Bybee, 331 S.W.2d at 917. We sustain American's first issue. ⁽⁷⁾  

CONCLUSION

We conclude that American should be given the opportunity to amend its pleadings to allege facts demonstrating jurisdiction. Accordingly, we reverse the district court judgment and remand this case for further proceedings consistent with this opinion.

Jan P. Patterson, Justice

Before Chief Justice Aboussie, Justices Yeakel and Patterson

Reversed and Remanded

Filed: March 15, 2001

Do Not Publish

1. The record shows that Huebner is a pro se defendant who has not yet filed an appearance.

2. See U.S. Const. amend. XIV, § 1; Tex. Const. art. I, § 19.

3. When reviewing a plea to the jurisdiction, we take the factual allegations in the plaintiff's petition as true unless challenged as fraudulently made to confer jurisdiction. See Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000); Brannon v. Pacific Employers Ins. Co., 224 S.W.2d 466, 469 (Tex. 1949). Because the Commission does not challenge the factual allegations in American's petition as fraudulent, our recitation of the facts is taken from the first amended petition and, for purposes of this appeal, the material facts are undisputed.

4. Although the Texas Constitution speaks of "due course of law," no distinction should be drawn between that phrase and "due process of law." University of Tex. Med. Sch. v. Than, 901 S.W.2d 926, 929 (Tex. 1995). The "due course of law" clause of the Texas Constitution provides at least the same protection as the Due Process Clause of the United States Constitution. Texas Workers' Comp. Comm'n v. Garcia, 893 S.W.2d 504, 525 (Tex. 1995).

5. Since January 1, 1995, the Commission's Hearings Division has turned over hearings to review decisions of the Medical Review Division to SOAH. Tex. Lab. Code Ann. § 413.031(d) (West 1996).

6. The Commission contends that it "was unaware of the existence of the amended petition until some point in the hearing on [the Commission's] plea to the jurisdiction," characterizing this failure to serve as an innocent oversight by American.

7. Given our disposition on American's first issue, we need not reach its second argument that the APA contains an independent right of judicial review for medical benefits disputes in workers' compensation cases. Tex. Gov't Code Ann. § 2001.171 (West 2000).

court's reasons for granting the Commission's plea to the jurisdiction from the record before us. Rather than dispute that an inherent right to judicial review based on due process may exist here, the Commission complains solely that American's pleading is insufficient.

If a court can ascertain that a plaintiff's allegations cannot state a cause of action, even if amended, then the court can properly grant a plea to the jurisdiction. Bybee v. Firemen's Fund Ins. Co., 331 S.W.2d 910, 917 (Tex. 1960). When, instead, a plaintiff may be able to cure a jurisdictional defect by amending its pleadings, a court should not grant a plea to the jurisdiction without first allowing an opportunity to replead. Id.; see also Texas Ass'n of Bus., 852 S.W.2d at 446; Peek, 779 S.W.2d at 805. When a jurisdictional defect is curable, the true issue is one of sufficiency of pleading, not of jurisdiction. Bybee, 331 S.W.2d at 917.

In this case, the Commission did not file special exceptions to challenge the sufficiency of the allegations American first pleaded in its amended petition. ⁽⁶⁾ American asserts that it can cure any asserted deficiency. Because the issue here may be one of sufficiency of pleading, and not jurisdiction, American is entitled to an opportunity to replead. See Bybee, 331 S.W.2d at 917. We sustain American's first issue. ⁽⁷⁾  

CONCLUSION

We conclude that American should be given the opportunity to amend its pleadings to allege facts demonstrating jurisdiction. Accordingly, we reverse the district court judgment and remand t