Discover Property & Casualty Insurance Company v. Charles Tate ( 2009 )

i i i i i i
OPINION
No. 04-08-00757-CV
DISCOVER PROPERTY & CASUALTY INSURANCE COMPANY,
Appellant
v.
Charles TATE,
Appellee
From the 45th Judicial District Court, Bexar County, Texas
Trial Court No. 2007-CI-11318
Honorable Barbara Hanson Nellermoe, Judge Presiding
Opinion by: Phylis J. Speedlin, Justice
Concurring and dissenting opinion: Sandee Bryan Marion, Justice
Sitting: Karen Angelini, Justice
Sandee Bryan Marion, Justice
Phylis J. Speedlin, Justice
Delivered and Filed: June 24, 2009
REVERSED AND REMANDED
Discover Property & Casualty Insurance Company (“Discover”) appeals an award of
attorney’s fees against it under section 408.221(c) of the Texas Workers’ Compensation Act.
Because we hold the trial court erred in denying Discover’s right to a jury trial on the amount of
reasonable and necessary attorney’s fees, we reverse and remand for a new trial on attorney’s fees.
04-08-00757-CV
FACTUAL AND PROCEDURAL BACKGROUND
Charles Tate, a maintenance mechanic, was injured during the course of his employment
when he fell from a ladder. Tate sought workers’ compensation benefits from Discover, his
employer’s insurance carrier. While Discover ultimately agreed that Tate’s injury was compensable,
it rejected two of his applications for supplemental income benefits because it did not believe he was
participating in a full-time vocational rehabilitation program. Tate initiated a contested case hearing
in which he was successful. Discover appealed to an appeals panel of the Texas Department of
Insurance, Division of Workers’ Compensation (“DWC”). The DWC panel affirmed the case
hearing officer’s rulings that Tate was entitled to receive second and third quarter supplemental
income benefits.
Discover then sought judicial review in the district court and requested a jury trial; it filed
a motion to consolidate the two cases, which was granted. Tate filed a general denial, along with
a counterclaim seeking to recover his attorney’s fees from Discover under section 408.221(c) of the
Texas Workers’ Compensation Act (the “Act”) in the event Discover did not prevail on judicial
review. TEX . LABOR CODE ANN . § 408.221(c) (Vernon 2006). After a two-day trial, the jury found
that Tate was entitled to receive approximately $9,800 in second and third quarter supplemental
income benefits.
Tate filed two post-trial motions—a motion to enter judgment on the jury’s verdict, and a
motion for approval and award of his attorney’s fees by the court. Affidavits from three of his
attorneys (Mike Doyle, John Davis, and Peter Kelly, appellate counsel) and itemized billing
statements were attached to Tate’s motion for attorney’s fees, which requested total fees through trial
of $105,676.96, plus $4,255 in fees for recovering his attorney’s fees and conditional appellate fees.
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Discover filed a response objecting to Tate’s request for attorney’s fees, arguing his claim for fees
was waived because no evidence of fees was submitted to the jury; it also disputed the amount and
attached an affidavit from its attorney opining that the fees were excessive. Discover asserted in its
response that because the “reasonable and necessary” amount of fees was disputed, it was a fact
question for the jury to resolve. At the hearing on Tate’s motion for attorney’s fees, Discover argued
waiver based on the lack of a jury finding on the amount of attorney’s fees, and objected to
proceeding on the basis of affidavits alone. It reiterated its position that the amount of reasonable
fees was a jury issue, and alternatively requested a plenary or evidentiary hearing on the issue. Both
requests were denied by the trial court. At the conclusion of the hearing, the trial court entered
judgment on the jury’s verdict and awarded Tate the following attorney’s fees: $105,676.96 in
attorney’s fees through the end of trial; $1,000 (reduced) for attorney’s fees incurred in recovering
his attorney’s fees; and $25,000 (reduced) in conditional appellate attorney’s fees. Discover
appealed, challenging only the award of attorney’s fees.
In its first four issues on appeal, Discover argues the trial court erred in denying it a jury trial,
or, at a minimum, a plenary hearing, on the amount of “reasonable and necessary” attorney’s fees;
Discover also argues that Tate waived his claim for attorney’s fees, either by failing to submit a jury
issue on the amount of reasonable and necessary fees or, alternatively, by failing to admit any
evidence on the amount of reasonable and necessary fees at a plenary hearing. Discover also asserts
that Tate is not entitled to recover attorney’s fees incurred “in pursuit of fees.” Finally, Discover
challenges the award of attorney’s fees as excessive.
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RECOVERY OF ATTORNEY ’S FEES UNDER SECTION 408.221(c)
Section 408.221 of the Act authorizes the recovery of attorney’s fees by a workers’
compensation claimant. TEX . LABOR CODE ANN . § 408.221 (Vernon 2006). Prior to a 2001
amendment, section 408.221 provided that a claimant’s attorney’s fees were to be paid out of the
claimant’s recovery, subject to a 25% cap. With the 2001 amendment, the legislature created an
exception by adding subsection (c), which shifts liability for a claimant’s attorney’s fees to the
insurance carrier when the carrier seeks judicial review of a workers’ compensation award and fails
to prevail on one or more issues. Id. § 408.221(c). The main issue presented in this appeal is
whether a jury trial, or, alternatively, a plenary hearing,1 when requested, is permitted under
subsection (c) on the issue of the amount of reasonable and necessary attorney’s fees.
1. Jury Trial on Amount of Attorney’s Fees under Subsection (c).
Discover argues it was entitled to a jury trial on Tate’s claim for attorney’s fees, particularly
as to the amount of “reasonable and necessary” fees. It contends that section 408.221 should not be
interpreted as “denying the right to a jury trial,” as guaranteed by Texas Supreme Court precedent
and the Texas Constitution, when liability for the claimant’s attorney’s fees is shifted to the
insurance carrier under subsection (c). Tate responds that the plain language of section 408.221
makes the trial judge the fact-finder as to the reasonable amount of attorney’s fees, noting that
subsection (b) states that an attorney’s fee must be based on “written evidence” submitted to the
court. Tate contends there is never a right to a jury trial, or a plenary hearing, on the amount of
attorney’s fees recoverable under section 408.221, even when the fee-shifting provisions of
subsection (c) come into play.
1
… A plenary hearing involves witnesses presenting testimony in court or by deposition, and thus subject to
cross-examination, rather than by affidavit. Jack B. Anglin Co. v. Tipps, 842 S.W .2d 266, 269 (Tex. 1992).
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We begin by noting that when the Texas Supreme Court has dealt with the issue of a
“reasonable and necessary” amount of attorney’s fees recoverable under a statute, it has consistently
held that it is a question of fact for a jury to resolve. See City of Garland v. Dallas Morning News,
22 S.W.3d 351, 367-68 (Tex. 2000) (holding that the amount of attorney’s fees recoverable under
a provision of the Public Information Act stating that “the court may assess” reasonable attorney’s
fees is a fact question for a jury); Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998) (interpreting
a similarly-worded provision of the Declaratory Judgment Act to allow a jury to determine the
amount of “reasonable and necessary” attorney’s fees); see also Stewart Title Guar. Co. v. Aiello,
941 S.W.2d 68, 73 (Tex. 1997) (award of appellate attorney’s fees is a question of fact for the jury);
Great Am. Reserve Ins. Co. v. Britton, 406 S.W.2d 901, 907 (Tex. 1966) (reasonableness of
attorney’s fees is a fact question that may be submitted to a jury). The Supreme Court in City of
Garland rejected the same type of reasoning voiced by Tate—that the plain language of the statute
authorizing “the court” to assess “reasonable attorney’s fees,” and the omission of an express
provision permitting a jury determination as to the amount, showed the Legislature intended the trial
judge to be the fact-finder and to determine the amount of reasonable attorney’s fees. See City of
Garland, 22 S.W.3d at 367. In City of Garland, the Supreme Court interpreted the statutory
language “the court may assess . . . reasonable attorney fees” as requiring the trial court to decide
whether to award attorney’s fees, but noted that the statute did not dictate how to determine a
“reasonable” amount of fees. Id. The Court noted that generally the reasonableness of statutory
attorney’s fees is a jury question. Id. (internal citations omitted). Similarly, in Bocquet, the Court
held that the statutory language of the Declaratory Judgment Act required the trial judge to determine
whether to award attorney’s fees, but allowed the jury to determine the amount of reasonable
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attorney’s fees. Bocquet, 972 S.W.2d at 21; see Holland v. Wal-Mart Stores, Inc., 1 S.W.3d 91, 94
(Tex. 1999) (stating that the availability of attorney’s fees under a particular statute is a question of
law for the court, and the jury’s finding as to the amount of reasonable attorney’s fees is immaterial
to the legal issue of whether fees are recoverable as a matter of law). We must therefore interpret
section 408.221’s provisions authorizing the recovery of a claimant’s attorney’s fees in view of this
Supreme Court precedent recognizing the general right to a jury determination of the reasonable
amount of attorney’s fees.
We conduct a de novo review and interpret section 408.221(c), the particular subsection at
issue, according to the basic principles of statutory construction. Holland, 1 S.W.3d at 94 (a party’s
ability to recover attorney’s fees under a certain statute is a question of law which we review de
novo); El Paso Natural Gas Co. v. Minco Oil & Gas, Inc., 8 S.W.3d 309, 312 (Tex. 1999). Our
overriding goal is to determine and give effect to the legislative intent expressed in the statute. TEX .
GOV ’T CODE ANN . § 311.011 (Vernon 2005). We begin by looking to the plain and common
meaning of the words used in the statute, and construe the statute as a whole rather than isolating
particular words or phrases from the statutory context. Tex. Dep’t of Transp. v. City of Sunset
Valley, 146 S.W.3d 637, 642 (Tex. 2004); Kroger Co. v. Keng, 23 S.W.3d 347, 349 (Tex. 2000).
If the meaning of the statutory language is not ambiguous, we interpret it according to its plain terms
and consistent with the other provisions of the statute. City of Sunset Valley, 146 S.W.3d at 642.
We read every word as if it were deliberately chosen and presume that omitted words were excluded
purposefully. Cornyn v. Universe Life Ins. Co., 988 S.W.2d 376, 379 (Tex. App.—Austin 1999, pet.
denied). Finally, we also consider the objectives of the statute and the consequences of a particular
interpretation. City of Sunset Valley, 146 S.W.3d at 642; see Keng, 23 S.W.3d at 349 (provisions
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of the Texas Workers’ Compensation Act should be liberally construed in favor of the injured
employee).
We begin by looking to the plain language of the statute. In relevant part, section 408.221
provides,
(a) An attorney’s fee, including a contingency fee, for representing a claimant
before the division or court under this subtitle must be approved by the
commissioner or court.
(b) Except as otherwise provided, an attorney’s fee under this section is based on
the attorney’s time and expenses according to written evidence presented to
the division or court. Except as provided by Subsection (c) . . ., the attorney’s
fee shall be paid from the claimant’s recovery.
(c) An insurance carrier that seeks judicial review under Subchapter G, Chapter
410, of a final decision of the appeals panel regarding compensability or
eligibility for, or the amount of, income or death benefits is liable for
reasonable and necessary attorney’s fees as provided by Subsection (d)
incurred by the claimant as a result of the insurance carrier’s appeal if the
claimant prevails on an issue on which judicial review is sought by the
insurance carrier . . . If the carrier appeals multiple issues and the claimant
prevails on some, but not all, of the issues appealed, the court shall apportion
and award fees to the claimant’s attorney only for the issues on which the
claimant prevails. In making that apportionment, the court shall consider the
factors prescribed by Subsection (d) . . . .
(d) In approving an attorney’s fee under this section, the commissioner or court
shall consider:
(1) the time and labor required;
(2) the novelty and difficulty of the questions involved;
(3) the skill required to perform the legal services properly;
(4) the fee customarily charged in the locality for similar legal services;
(5) the amount involved in the controversy;
(6) the benefits to the claimant that the attorney is responsible for
securing; and
(7) the experience and ability of the attorney performing the services.
...
(i) Except as provided by Subsection (c) . . ., an attorney’s fee may not exceed
25 percent of the claimant’s recovery.
TEX . LABOR CODE ANN . § 408.221.
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As stated, we are concerned with subsection (c) in this case, but must interpret it within the
context of the statute as a whole. First, we note that subsection (c) does not give the trial court
discretion as to “whether” to award attorney’s fees, but rather requires it by providing in affirmative
language that the insurance carrier “is liable for” the claimant’s reasonable and necessary attorney’s
fees. Id. § 408.221(c). The interpretive question before us is whether subsection (c) permits a jury
trial on the amount of reasonable and necessary attorney’s fees for which the insurance carrier is
liable, or whether the trial court alone must make that determination. There is nothing in the
statutory language of subsection (c) that expressly prohibits a jury trial on the amount of attorney’s
fees when the liability is shifted to the insurance carrier. Reading section 408.221 as a whole,
subsection (a) requires that a claimant’s attorney’s fee under the subtitle must be “approved” by “the
court.” Id. § 408.221(a). Subsection (b) states that an attorney’s fee under the section is “based on
the attorney’s time and expenses according to written evidence presented to the . . . court” — “except
as otherwise provided.” Id. § 408.221(b) (emphasis added). Subsection (c) states affirmatively that
an insurance carrier who seeks judicial review “is liable for reasonable and necessary attorney’s fees
as provided by Subsection (d)” which are incurred by the claimant “as a result of” the carrier’s appeal
if the claimant prevails on an issue. Id. § 408.221(c) (emphasis added). Subsection (c) goes on to
require the court to apportion the claimant’s attorney’s fees according to the issues prevailed upon
if the carrier appeals multiple issues. Id. Subsection (d) lists the Andersen2 factors that are to be
considered by the court in approving an attorney’s fee under section 408.221. Id. § 408.221(d).
Reading subsection (c) in the context of the statute as a whole, particularly together with
subsections (b) and (d), we conclude the Legislature intended the amount of “reasonable and
2
… Arthur Andersen & Co. v. Perry Equipment Corp., 945 S.W .2d 812 (Tex. 1997).
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necessary” fees under (c) to be calculated based on the Andersen factors set forth in (d), not merely
on the “attorney’s time and expenses according to written evidence” as provided in (b). We read (b)
as applying to the situation where a claimant’s attorney’s fees are to be paid out of the claimant’s
recovery, which was the original application of section 408.221 before subsection (c) was added in
2001. When the claimant’s attorney’s fees are to be paid out of the claimant’s recovery, subsection
(b) provides a streamlined procedure in which the trial judge determines the amount of fees based
only on “the attorney’s time and expenses according to written evidence” presented to the court. Id.
§ 408.221(b). In that situation, where the fees are paid out of the claimant’s recovery, the statute
affirmatively provides the manner of determining the amount of fees, i.e., by the court based on
written evidence of time and expenses; while subsection (b) does not expressly prohibit a jury
determination, its clear meaning is that the trial court acts as the fact-finder as to the amount of fees,
not a jury.3 Id. Moreover, subsection (b) provides that only one of the Andersen factors, the
“attorney’s time and expenses,” is to be the basis for the fee award. Id. Subsection (c), on the other
hand, provides that the amount of reasonable and necessary attorney’s fees is “as provided by
Subsection (d),” which includes not only the attorney’s “time and labor,” but six more of the fact-
intensive Andersen factors. Id. § 408.221(c). In addition, the Legislature’s inclusion in subsection
(b) of the modifier “except as otherwise provided,” supports our interpretation that the calculation
of the fee award under (c)’s fee-shifting provision is to be based on the more detailed factors required
3
… Indeed, we have previously interpreted section 408.221 as requiring that the court approve the claimant’s
request for attorney’s fees and determine the amount of fees recoverable out of the claimant’s recovery “without the aid
of a jury.” Transcontinental Ins. Co. v. Smith, 135 S.W .3d 831, 838 (Tex. App.— San Antonio 2004, no pet.) (citing
Texas Employers Ins. Ass’n v. Motley, 491 S.W .2d 395, 397 (Tex. 1973)). We note that the version of the statute
applicable in Smith, based on the 1998 date of the compensable injury, was the prior version of section 408.221, before
the fee-shifting provisions of subsection (c) were added. Id. at 833. Likewise, Motley was decided well before the
addition of a fee-shifting provision. Motley, 491 S.W .2d at 397.
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to be considered under subsection (d), which are fact-intensive, and thus within the proper purview
of a jury. See Andersen, 945 S.W.2d at 818-19.
We recognize that one of our sister courts of appeal has recently decided this issue
differently. See Transcontinental Ins. Co. v. Crump, 274 S.W.3d 86 (Tex. App.—Houston [14th
Dist.] 2008, pet. filed). In Crump, the insurance carrier did not prevail on judicial review of a
worker’s compensation award, and was held liable for the claimant’s attorney’s fees under section
408.221(c). In one of its issues on appeal, the insurance carrier challenged the trial court’s denial of
its request for a jury trial on the issue of attorney’s fees under section 408.221(c). The court in
Crump held the trial court did not err in denying a jury trial on attorney’s fees; however, it based that
decision only on whether two provisions of the Texas Constitution guaranteed a jury trial on
attorney’s fees in a worker’s compensation case, finding they did not. Id. at 100-02 (discussing
article I, section 15, and article V, section 10 of the Texas Constitution). The Crump court only
considered the constitutional implications of the denial of a jury trial on attorney’s fees in a worker’s
compensation case, and did not consider or address the Bocquet/City of Garland line of cases by the
Texas Supreme Court holding that the amount of attorney’s fees is generally a jury issue. We
therefore find Crump distinguishable from the issue presented in this appeal.
Viewing the language of section 408.221(c) in the context of the whole statute, and along
with Supreme Court precedent on the issue, we conclude that a jury determination as to the amount
of “reasonable and necessary” attorney’s fees, when requested, is not prohibited by the statute. See
Acker v. Tex. Water Comm’n, 790 S.W.2d 299, 301 (Tex. 1990) (“A statute is presumed to have been
enacted by the legislature with complete knowledge of the existing law and with reference to it.”).
Here, Discover requested a jury trial in its original petition, filed a response objecting to Tate’s
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recovery of his attorney’s fees without a jury determination, filed a controverting affidavit as to the
amount of reasonable and necessary fees thereby creating a disputed fact issue, and objected to
proceeding to a determination of attorney’s fees based on affidavits alone. We hold that Discover
was entitled to a jury trial on the amount of reasonable and necessary attorney’s fees recoverable by
Tate under section 408.221(c).4 Accordingly, we reverse the trial court’s order awarding Tate his
attorney’s fees, and remand for a new trial on the “reasonable and necessary” amount of attorney’s
fees for which Discover is liable under section 408.221(c). See City of Garland, 22 S.W.3d at 368
(remand for jury trial on attorney’s fees appropriate remedy); see also Britton, 406 S.W.2d at 907
(claim for attorney’s fees is severable).
Having determined that under applicable Supreme Court precedent Discover was entitled
to a jury determination of the amount of attorney’s fees recoverable by Tate under section
408.221(c), we need not address Discover’s argument that it also had the right to a jury trial under
the Texas Constitution, or its alternative argument that it had the right to a plenary hearing on the
issue of attorney’s fees. In addition, because we are reversing and remanding for a new trial on the
amount of attorney’s fees, we do not reach Discover’s complaint that the fees awarded by the trial
court are excessive.
2. Waiver of Claim for Attorney’s Fees.
Discover also argues on appeal that, because the reasonable amount of attorney’s fees is a
jury issue, Tate waived his counterclaim for attorney’s fees by failing to submit a jury issue on fees
during trial, or by failing to object to omission of such an issue from the jury charge. See TEX . R.
4
… Parties may certainly agree to submit the amount of reasonable and necessary attorney’s fees recoverable
under section 408.221(c) to the trial court for determination. See Financial Ins. Co. v. Ragsdale, 166 S.W .3d 922, 930
(Tex. App.— El Paso 2005, no pet.) (parties agreed to submit issue of amount of attorney’s fees recoverable under section
408.221(c) to the trial court).
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CIV . P. 279. We agree that under Rule 279, a party with the burden of proof on a ground of recovery
or defense has the duty to submit all disputed elements of his cause of action to the jury. Id.; see
Cameron County v. Velasquez, 668 S.W.2d 776, 781 (Tex. App.—Corpus Christi 1984, writ ref’d
n.r.e.). Generally, unless conclusively established by the evidence, a party’s failure to submit a
properly worded issue, or object to its omission, results in waiver. TEX . R. CIV . P. 279; Bank of Tex.
v. VR Elec., Inc., 276 S.W.3d 671, 676 (Tex. App.—Houston [1st Dist.] 2008, pet. filed). Here, Tate
sought affirmative relief by his claim for attorney’s fees under section 408.221(c), but clearly failed
to submit the issue to the jury. See Dean Foods Co. v. Anderson, 178 S.W.3d 449, 453 (Tex.
App.—Amarillo 2005, pet. denied) (request for attorney’s fees in judicial review of worker’s
compensation award is a claim for affirmative relief). Under the circumstances of this case,
however, and in the interest of justice, we decline to find waiver.
First, as previously noted, section 408.221(c) mandates an award of attorney’s fees to the
claimant when he prevails on an issue on which the insurer sought judicial review. Here, Tate
consistently argued in the trial court that the amount of attorney’s fees recoverable by him under
section 408.221(c) was to be determined by the court, and that the statute in fact prohibited a jury
trial on attorney’s fees. In support, Tate relied on the statutory language, as well as our prior opinion
in Smith5 (issued before subsection (c) was added) and the recent Crump opinion. Indeed, the court
in Crump rejected the same argument now made by Discover, i.e., that the claimant had waived his
claim for attorney’s fees by failing to submit it to the jury. See Crump, 274 S.W.3d at 102-03.
Based on this authority, Tate took what he thought was appropriate affirmative action by filing a
post-trial motion for attorney’s fees with supporting affidavits and exhibits detailing his attorneys’
5
… Transcontinental Ins. Co. v. Smith, 135 S.W .3d 831 (Tex. App.–San Antonio 2004, no pet.).
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time and expenses. Because this court has not previously held that, when requested by either party,
a jury should determine the reasonable amount of attorney’s fees under section 408.221(c), we
decline to hold that Tate waived his claim for fees by not submitting a jury issue on fees or objecting
to its omission. Instead, in the interest of justice, we remand for a new trial on the amount of
attorney’s fees. See TEX . R. APP . P. 43.3(b) (appellate court has broad discretion to remand for new
trial in the interest of justice); see also Twyman v. Twyman, 855 S.W.2d 619, 626 (Tex. 1993)
(remand for new trial in the interest of justice is appropriate when it appears that case proceeded in
trial court under wrong legal theory, and when it appears that the facts when developed on retrial
may support recovery on an alternative theory); Scott Bader, Inc. v. Sandstone Products, Inc., 248
S.W.3d 802, 822 (Tex. App.—Houston [1st Dist.] 2008, no pet.) (remand is appropriate when a case,
for any reason, has not been fully developed).
3. Fees in Pursuit of Fees.
Because it is capable of being repeated by the trial court on remand, we must address
Discover’s argument that Tate is not entitled to recover his attorney’s fees in pursuit of attorney’s
fees. The trial court awarded Tate $1,000 in attorney’s fees incurred in attending the hearing on
Tate’s motion for attorney’s fees under section 408.221(c). Discover argues that Tate is not entitled
to recover attorney’s fees for pursuing recovery of his attorney’s fees because the statute does not
expressly authorize such fees. Tate responds6 that the Act should be construed liberally in favor of
the injured worker and that under the broad statutory language, he is entitled to recover all reasonable
6
… In his brief, Tate initially asserts that Discover failed to preserve this issue because it did not object to
recovery of “fees in pursuit of fees” in its written response. However, at the hearing on attorney’s fees, Discover’s
counsel argued that under Vega-Garcia Tate was not entitled to recover “fees on top of fees,” and objected to any such
recovery. Twin City Fire Ins. Co. v. Vega-Garcia , 223 S.W .3d 762 (Tex. App.–Dallas 2007, pet. denied). Therefore,
the issue was raised in the trial court, and properly preserved. T EX . R. A PP . P. 33.1.
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attorney’s fees incurred “as a result of” the carrier’s appeal, including “fees in pursuit of fees.” We
apply a de novo standard of review to the issue of whether attorney’s fees are recoverable under a
particular statute, as such a determination is a question of law. Holland, 1 S.W.3d at 94; El Paso
Natural Gas, 8 S.W.3d at 312. In interpreting the statutory language of subsection (c), we apply the
same basic principles of statutory construction discussed above.
Section 408.221(c) states that an insurance carrier that seeks judicial review is liable for
“reasonable and necessary attorney’s fees as provided by Subsection (d) incurred by the claimant as
a result of the insurance carrier’s appeal if the claimant prevails on an issue . . . If the carrier
appeals multiple issues and the claimant prevails on some, but not all, of the issues appealed, the
court shall apportion and award fees to the claimant’s attorney only for the issues on which the
claimant prevails.” TEX . LABOR CODE ANN . § 408.221(c) (emphasis added). Two of our sister
courts of appeal have interpreted this language in the context of an insurance carrier’s challenge to
recovery of “fees in pursuit of fees,” and have reached conflicting results.
Discover relies on Twin City Fire Ins. Co. v. Vega-Garcia, 223 S.W.3d 762, 769-70 (Tex.
App.—Dallas 2007, pet. denied), in which the court held that a worker’s compensation claimant may
not recover attorney’s fees incurred in the pursuit of her attorney’s fees under section 408.221(c).
In Vega-Garcia, the insurance company sought judicial review of an award of supplemental income
benefits, but subsequently non-suited the action. The claimant submitted the issue of attorney’s fees
to a jury, and was awarded $18,540 for preparation and trial, plus $5,126 for fees in pursuit of fees
and $10,000 in conditional appellate fees. Id. at 765. The insurer appealed, among other issues, the
award of fees in pursuit of fees. The Dallas court began its analysis of this issue by noting that when
the basis for recovery of attorney’s fees is statutory, “an award of attorney’s fees may not be supplied
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by implication but must be provided for by the express terms of the statute in question.” Id. at 769
(quoting First City Bank-Farmers Branch, Tex. v. Guex, 677 S.W.2d 25, 30 (Tex. 1984)). While
recognizing that the Act is to be liberally construed in favor of injured workers, the court
nevertheless concluded there is no language in section 408.221, or section 408.147,7 that can be
construed to permit recovery of fees “for pursuit of attorney’s fees.” Id. The court reasoned that
because section 408.221(c) directly links the insurance carrier’s liability for the claimant’s attorney’s
fees to its action in seeking judicial review, and expressly provides for apportionment of fees only
for the issues on which the claimant prevails in a multi-issue appeal, the statute “clearly limits
recovery of attorney’s fees to those fees incurred by [the claimant] in prevailing on the issue on
which judicial review was sought.” Id. (emphasis added). In Vega-Garcia, attorney’s fees were not
awarded at the commission level, and thus attorney’s fees was not an issue on which judicial review
was sought; therefore, the claimant could not recover. Id. at 769-70 (concluding there is no
provision in section 408.221 permitting an award of attorney’s fees incurred in pursuit of fees, and
reversing the $5,126 fee award and rendering a take-nothing judgment on that claim).8
Tate characterizes Vega-Garcia’s construction of section 408.221(c) as only permitting
recovery of attorney’s fees incurred “in defense of” the insurance carrier’s judicial review
proceeding. See id. Tate argues the opinion is flawed because the Dallas court did not follow basic
principles of statutory construction which require the court to construe the statute according to the
7
… Section 408.147 of the Act, entitled “Contest of Supplemental Income Benefits by Insurance Carrier;
Attorney’s Fees,” provides in relevant part that, “[i]f an insurance carrier disputes the commissioner’s determination that
an employee is entitled to supplemental income benefits or the amount . . . due and the employee prevails on any disputed
issue, the insurance carrier is liable for reasonable and necessary attorney’s fees incurred by the employee as a result of
the insurance carrier’s dispute. . . .” T EX . L ABOR C O D E A N N . § 408.147(c) (Vernon 2006).
8
… W e note the insurance company in Vega-Garcia did not appeal the jury award of $18,540 in attorney’s fees
incurred for preparation and trial concerning the award of supplemental income benefits, or the award of conditional
appellate fees. Vega-Garcia, 223 S.W .3d at 765, 770 n.2.
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plain, unambiguous meaning of its language, and in light of the legislative purpose of the statutory
workers’ compensation scheme, i.e., to protect the injured worker. See Keng, 23 S.W.3d at 349
(Texas Workers’ Compensation Act should be liberally construed in favor of injured workers, and
a strained or narrow interpretation of the Act is improper). Tate argues the phrase “as a result of”
the insurer’s appeal in section 408.221(c) encompasses all attorney’s fees that flow out of the judicial
review appeal, and extends to fees incurred in order to exercise the claimant’s right to recover its
attorney’s fees when the insurer loses on judicial review. Tate primarily relies on Crump, in which
the Houston court of appeals recently held that, under the plain language of section 408.221(c), a
claimant who prevails on an issue on which the carrier sought judicial review is entitled to all her
attorney’s fees incurred “as a result of” the appeal. Crump, 274 S.W.3d at 104 (emphasis added).9
The court reasoned that because the claimant was required, through her attorneys, to prepare and
submit written evidence to the trial court to support her request for fees under section 408.221(c),
and was required to set the matter for a hearing because the parties could not agree as to the amount
of fees, the claimant incurred those attorney’s fees (in pursuit of fees) “as a result of” the carrier’s
appeal. Id. (citing Tex. Mun. League Intergovernmental Risk Pool v. Burns, 209 S.W.3d 806, 819-20
(Tex. App.—Fort Worth 2006, no pet.) (affirming award of post-trial attorney’s fees incurred by
claimant as a result of insurance carrier’s appeal of workers’ compensation award)).
The Crump opinion briefly distinguishes Vega-Garcia on the basis that the insurance carrier
in that case had non-suited its judicial review proceeding. Id. at 104 (stating, without further
explanation, “[b]ecause the insurance carrier non-suited its judicial review proceeding, we find Vega-
Garcia distinguishable from this case . . .”). Discover argues that distinction is not persuasive, and
9
… A petition for review in the Texas Supreme Court was filed in Crump on January 5, 2009.
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we agree. In concluding the claimant was the “prevailing party” for purposes of section 408.221(c),
the court in Vega-Garcia specifically stated that the claimant was simply defending her award
against the insurer’s appeal, and was thus in the same position after the non-suit as she would have
been if she had prevailed after a trial; therefore, the fact that a non-suit was taken only affected the
amount of attorney’s fees, not the claimant’s right to recover her attorney’s fees. See Vega-Garcia,
223 S.W.3d at 767-68; see also Dean Foods, 178 S.W.3d at 454-55 (when insurance carrier non-
suits, claimant is the “prevailing party” for purposes of section 408.221(c)); Pacific Employers Ins.
Co. v. Torres, 174 S.W.3d 344, 346-47 (Tex. App.—El Paso 2005, no pet.) (same).
We agree with the reasoning in Vega-Garcia that the “as a result of” language used in section
408.221(c) requires the attorney’s fees to have been incurred on judicial review of an issue on which
the claimant prevailed. Accordingly, we hold that attorney’s fees incurred only in pursuit of
attorney’s fees may not be recovered under section 408.221(c).
Conclusion.
Based on the foregoing analysis, we conclude the statute at issue, section 408.221(c) of the
Texas Workers’ Compensation Act, entitles Discover to a jury trial on the “reasonable and
necessary” amount of attorney’s fees recoverable by Tate. Accordingly, we remand to the trial court
for further proceedings consistent with this opinion.
Phylis J. Speedlin, Justice
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