Severiano DeLeon v. Royal Indemnity Company ( 2010 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-08-00532-CV
Severiano DeLeon, Appellant
v.
Royal Indemnity Company, Appellee
FROM THE DISTRICT COURT OF HAYS COUNTY, 274TH JUDICIAL DISTRICT
NO. 06-0030, HONORABLE WILLIAM HENRY, JUDGE PRESIDING
MEMORANDUM OPINION
This is a workers’ compensation case in which the insurance carrier, appellee
Royal Indemnity Company, contested the impairment rating assigned to the claimant, appellant
Severiano DeLeon, by the Texas Department of Insurance, Division of Workers’ Compensation
(the “Division”).1 That impairment rating was based on advisories issued by the Division that
have been determined by this Court to be invalid. This determination was subsequent to the
Division’s ruling in this case, but prior to the district court’s review. See Texas Dep’t of Ins.
v. Lumbermens Mut. Cas. Co., 212 S.W.3d 870, 876-77 (Tex. App.—Austin 2006, pet. denied).
1
The Texas Workers’ Compensation Commission was abolished effective September 1,
2005, and its functions were assumed by the division of workers’ compensation within the
Texas Department of Insurance. See Tex. Lab. Code Ann. § 402.001 (West 2006). We use the term
“Division” to refer to both the division of workers’ compensation and the former commission.
Consequently, the district court held that the assigned impairment rating was invalid. We affirm the
judgment of the district court.
Background
The Division administers the Texas Workers’ Compensation Act (the “Act”). See
Tex. Lab. Code Ann. § 402.001 (West 2006). The Act authorizes four levels of income benefits:
(1) temporary income benefits; (2) impairment income benefits; (3) supplemental income benefits;
and (4) lifetime benefits. See Texas Workers’ Comp. Comm’n v. Garcia, 893 S.W.2d 504, 513
(Tex. 1995). An injured worker qualifying for impairment benefits receives 70% of his average
weekly wage. Tex. Lab. Code Ann. § 408.126 (West 2006). In order to obtain such impairment
benefits, an employee must be certified by a doctor as having reached maximum medical
improvement (“MMI”) and must be assigned an “impairment rating” by the certifying doctor. See
id. § 408.123 (West 2006). An impairment rating is “the percentage of permanent impairment of
the whole body resulting from a compensable injury.” Id. § 401.011(24) (West Supp. 2009). MMI
generally occurs on the earliest date after which, based on reasonable medical probability, further
material recovery from or lasting improvement to an injury can no longer reasonably be anticipated.
See id. § 401.011(30)(A).2 These determinations impact the receipt of impairment benefits in that
the employee’s entitlement to impairment benefits begins the day after the employee reaches
2
The MMI date may not be assigned later than the expiration of 104 weeks from the date
on which income benefits begin to accrue, except to the extent the employee has had, or has
been approved for, spinal surgery, the employee or insurance carrier applies for an extension of the
104-week period, and the commissioner of workers’ compensation orders such extension to a date
certain. See Tex. Lab. Code Ann. § 401.011(30) (West Supp. 2009), § 408.104 (West 2006).
2
MMI and continues for three weeks for every percentage point of impairment. See id. § 408.121(a)
(West 2006); Fulton v. Associated Indem. Corp., 46 S.W.3d 364, 366 (Tex. App.—Austin 2001,
pet. denied). Moreover, if the impairment rating is 15% or greater, the employee may qualify for
supplemental income benefits, which provide long-term disability compensation. See Tex. Lab.
Code Ann. § 408.142(a) (West 2006); Fulton, 46 S.W.3d at 366.
On September 15, 2002, DeLeon injured his lower back in the course and
scope of his employment. As a result of the injury, on November 17, 2003, DeLeon had surgery
consisting of a two-level fusion on his lumbar spine. Royal Indemnity, DeLeon’s employer’s
workers’ compensation insurance carrier, paid medical benefits to DeLeon, but disputed the
amount of impairment income benefits to which he is entitled.
The parties agree that DeLeon’s date of MMI is June 1, 2004, but dispute the
impairment rating applicable to the spinal injury. In determining an employee’s impairment rating,
the Division is required to use the Guides to the Evaluation of Permanent Impairment published by
the American Medical Association. See Tex. Lab. Code Ann. § 408.124 (West 2006). Originally,
the third edition of the guides applied, see id. § 408.124(b), but the legislature granted the Division
discretion to adopt the fourth edition of the guides (the “AMA Guides”), see id. § 408.124(c),
which the Division did effective October 15, 2001, see 28 Tex. Admin. Code § 130.1(c)(2) (2009)
(Tex. Dep’t of Ins., Certification of Maximum Medical Improvement and Evaluation of Permanent
Impairment).3 Therefore, the AMA Guides are applicable to this proceeding.
3
The legislature also authorized the Division to adopt any subsequent edition of the guides.
See id. § 408.124(c) (West 2006). However, to date, the Division has not done so.
3
The principal methodology found in the AMA Guides is the “injury model,” which
uses objectively verifiable evidence to place patients into one of eight diagnosis-related estimate
(“DRE”) categories. See Lumbermens, 212 S.W.3d at 872. Under the injury model, in the case
of loss of motion segment integrity4 for a lumbosacral spine impairment, the DRE Category IV
may be assessed, which translates to a 20% impairment rating. If, however, there is evidence
of radiculopathy but no loss of motion segment integrity, the DRE Category III generally applies,
which translates to a 10% impairment rating.
In 2003 and 2004, the Division issued two advisories—Advisory 2003-10 and
Advisory 2003-10B (the “Advisories”)—relating to the determination of impairment ratings where
doctors performed spinal fusion surgeries. These Advisories stated that the impairment rating
for spinal fusion is determined by preoperative x-ray tests but that, in the event no preoperative x-ray
tests were performed, multilevel fusion meets the criteria for DRE Category IV.
In this case, the Division appointed Dr. Thomas Leonard to serve as a designated
doctor to examine DeLeon and certify his impairment rating. Dr. Leonard evaluated DeLeon on
June 1, 2004, and certified a 20% whole body impairment rating based on a DRE Category IV
assessment. In addition, DeLeon was referred to Dr. William Lawson, who evaluated DeLeon
on May 12, 2004, and also certified a 20% whole body impairment rating. On August 24, 2005,
the Division held a contested case hearing to determine DeLeon’s impairment rating. See Tex. Lab.
4
According to the AMA Guides, loss of motion segment integrity is defined as “abnormal
back-and-forth motion (translation) or abnormal angular motion of a motion segment with respect
to an adjacent motion segment.” See Texas Dep’t of Ins. v. Lumbermens Mut. Cas. Co., 212 S.W.3d
870, 872 (Tex. App.—Austin 2006, pet. denied).
4
Code Ann. § 410.151(a) (West 2006). The hearing officer determined that the designated doctor’s
impairment rating was not contrary to the great weight of the medical evidence, and approved
the 20% impairment rating. Royal Indemnity appealed this decision to the Division’s appeals panel,
which determined on December 8, 2005, that the hearing officer’s decision should become the
appeals panel’s final decision. See id. § 410.204 (West 2006). On January 9, 2006, Royal Indemnity
filed a petition for judicial review in Hays County district court. See id. § 410.251(a) (West 2006)
(authorizing judicial review of final decision of appeals panel).
While suit was pending, this Court issued its decision in Texas Department
of Insurance v. Lumbermens Mutual Casualty Co., in which multiple insurance companies
challenged the Advisories. In Lumbermens, this Court determined that the Advisories contradicted
the AMA Guides’s statement that “surgery to treat an impairment does not modify the original
impairment estimate, which remains the same in spite of any changes in signs or symptoms that
may follow the surgery.” 212 S.W.3d at 876. According to this Court, because the Advisories
contradicted the AMA Guides, they also contradicted labor code section 408.124 (authorizing
adoption of the AMA Guides) and Division rule 130.1 (adopting the AMA Guides). See id. at 876-
77. Consequently, this Court held that the issuance of the Advisories was invalid and application
of the Advisories was “ultra vires”—an act outside the Division’s legal authority—and affirmed the
district court’s enjoining of the Advisories’ continued use. See id. In response to Lumbermens, on
July 18, 2007, the Division issued a bulletin that announced that the Advisories “shall no longer be
used in determining impairment ratings.” See Tex. Dep’t of Ins., Comm’r’s Bulletin #B-0033-07
(July 18, 2007).
5
On June 4, 2008, the district court entered judgment in this case in favor of
Royal Indemnity, decreeing that the 20% impairment rating is invalid and, therefore, that DeLeon
does not have an impairment rating. The district court based its ruling as to the invalidity of
DeLeon’s impairment rating on a finding that the rating had been “improperly based on invalid and
withdrawn Division Advisories 2003-10 and 2003-10b.” DeLeon appeals.
Analysis
The Division’s decision on issues involving the amount of income benefits is
reviewed by the district court under a modified de novo review. See Tex. Lab. Code Ann.
§ 410.301(a) (West 2006); Garcia, 893 S.W.2d at 515; Financial Ins. Co. v. Ragsdale, 166 S.W.3d
922, 928 (Tex. App.—El Paso 2005, no pet.). The party that appeals bears the burden of proof by
a preponderance of the evidence. Tex. Lab. Code Ann. § 410.303 (West 2006). Evidence of the
extent of impairment is limited to that presented to the Division absent a finding that the claimant’s
condition has substantially changed, and the court can only adopt a specific impairment rating
arrived at by one of the doctors in the case. See id. §§ 410.306, .307 (West 2006); Garcia,
893 S.W.2d at 528. However, while the trier of fact is to consider the Division’s decision, it is
not required to accord the decision any particular weight. Tex. Lab. Code Ann. § 410.304(a)
(West 2006). In addition, the opinion of the designated doctor regarding impairment is accorded no
special weight. See Garcia, 893 S.W.2d at 515.
The 20% impairment rating assigned to DeLeon was based on the (subsequently
invalidated) Advisories. Dr. Leonard in his assessment “noted, according to the TWCC Advisory
2003-10, signed July 22, 2003, by Richard Reynolds, a multilevel fusion meets the criteria for
6
DRE Category IV.” Dr. Lawson, in assigning a 20% impairment rating, also “based this opinion
on the TWCC advisory 2003-10.” These Advisories have been held invalid, see Lumbermens,
212 S.W.3d at 876-77, and have been withdrawn, see Comm’r’s Bulletin #B-0033-07. Therefore,
the district court’s determination that the 20% impairment rating is invalid as being improperly based
on the “invalid and withdrawn” Advisories was correct.
We reject DeLeon’s arguments to the contrary. First, DeLeon contends that
Lumbermens’s holding cannot be applied against his interests because he was not made a party
in that case. The claim at issue in Lumbermens was for a declaratory judgment under the
Uniform Declaratory Judgments Act (UDJA). See 212 S.W.3d at 874-75. The UDJA provides that
any “declaration does not prejudice the rights of a person not a party to the proceeding.” Tex. Civ.
Prac. & Rem. Code Ann. § 37.006(a) (West 2008). However, this statutory provision relates to a
trial court’s joinder of interested parties. See id.; Brooks v. Northglen Ass’n, 141 S.W.3d 158, 162-
63 (Tex. 2004) (absence of interested party did not deprive court of jurisdiction). It does not relate
to the precedential value of an appellate court’s ruling. See Crickmer v. King, 507 S.W.2d 314,
316 (Tex. Civ. App.—Texarkana 1974, no writ) (non-necessary parties who were not joined in
UDJA suit, while not bound by declaration, may have their interests touched upon “indirectly or
‘practically’”).5 The district court correctly followed this Court’s holding in Lumbermens that the
Advisories at issue were invalid. See Bell v. Zurich Am. Ins. Co., 05-09-00284-CV, 2009 Tex. App.
5
Under DeLeon’s reasoning, if a court declared an action of a state agency or official to be
ultra vires under the UDJA with respect to a particular individual, the agency or official could—and,
in fact, should—continue performing such action in favor of any person who was not made a party
to the lawsuit.
7
LEXIS 8099, at *5-9 (Tex. App.—Dallas Oct. 20, 2009, no pet. h.) (holding that examining doctor
may not base impairment rating on Advisories) (citing Lumbermens, 212 S.W.3d at 873-77).
Next, DeLeon argues that this Court’s reasoning for holding the Advisories invalid
in Lumbermens—that the AMA Guides prohibit taking pre-MMI surgery into account in determining
the impairment rating—is incorrect. DeLeon relies on the statutory definition of “impairment,”
which refers to a condition “existing after maximum medical improvement.” See Tex. Lab. Code
Ann. § 401.011(23). DeLeon also relies on the Division’s regulations. See 28 Tex. Admin. Code
§ 130.1(c)(3) (“Assignment of an impairment rating for the current compensable injury shall
be based on the injured employee’s condition as of the MMI date considering the medical record
and the certifying examination.”); see also 29 Tex. Reg. 2328 (2004) (“This change clarifies that IR
assessments must be based on the injured employee’s condition as of the date of MMI and shall not
be based on changes in the injured employee’s condition occurring after that date, such as when the
injured employee’s condition changes as a result of surgery that takes place after the date of MMI.”).
DeLeon argues that the AMA Guides themselves requires consideration of pre-MMI surgery and that
the statement in the AMA Guides—relied on in Lumbermens—indicating that surgery to treat an
impairment does not modify the original impairment estimate refers only to post-MMI surgery. See
Texas Builders Ins. Co. v. Molder, No. 08-07-00200-CV, 2009 Tex. App. LEXIS 8398, at *19-23
(Tex. App.—El Paso Oct. 30, 2009, no pet.) (holding that impairment rating may take into account
shoulder surgeries performed before, but not after, MMI date). DeLeon also questions whether the
Division’s applying this Court’s reasoning in Lumbermens might implicate the due-course-of-law
provision of the Texas Constitution. See Tex. Const. art. I, § 19.
8
We decline to address these arguments. Our holding that DeLeon’s assigned
impairment rating is invalid because it is based on advisories that have been found invalid and
were withdrawn resolves this case. If DeLeon’s designated doctor had not relied on the Advisories,
and then expressly considered or ignored DeLeon’s pre-MMI back surgery in assessing
the impairment rating, DeLeon’s arguments might be relevant. In this case, however, the doctor did
rely on the invalidated Advisories. Therefore, we need not reach the issue of whether pre-MMI
surgery may be taken into account under the AMA Guides when assessing an impairment rating for
a spine impairment.
DeLeon also contends that the district court erred by admitting into evidence
the deposition on written questions of Dr. Leonard, which evidence was not in the administrative
record before the Division. In this deposition, Dr. Leonard addressed his assessment of DeLeon’s
impairment rating given the Division’s withdrawal of the Advisories. DeLeon is correct that unless
the court makes a threshold finding that the claimant’s condition has substantially changed (there
was no such finding in this case), evidence of the extent of impairment is limited to that which was
presented to the Division. See Tex. Lab. Code Ann. §§ 410.306(c), .307; Garcia, 893 S.W.2d at 528.
However, any error in the admission of evidence before the district court is harmless because, as
stated above, the properly admitted and considered evidence in the record is conclusive that the
20% impairment rating was based on the Advisories and, therefore, was invalid.6
6
DeLeon also complains that the district court erred by authorizing Royal Indemnity to
submit the deposition on written questions to Dr. Leonard in the first place, see Tex. Lab. Code Ann.
§ 408.125(d) (West 2006), and by failing to consider Dr. Leonard’s letter of clarification, which was
part of the administrative record. However, DeLeon neither raised his section 408.125 argument to
the district court nor attempted to have the letter of clarification entered into evidence. Therefore,
both complaints have been waived. See Tex. R. App. P. 33.1(a).
9
We affirm the judgment of the district court.7
__________________________________________
G. Alan Waldrop, Justice
Before Chief Justice Jones, Justices Waldrop and Henson
Affirmed
Filed: January 27, 2010
7
We note that, as a result of the 20% impairment rating being declared invalid, DeLeon
currently is without any impairment rating for his injury. The Act requires the trier of fact, in
determining the extent of impairment, to adopt one of the doctor-assigned impairment ratings
presented to the Division. See Tex. Lab. Code Ann. § 410.306(c) (West 2006). However, there is
no impairment rating in this case other than the one found invalid. Consequently, after determining
the 20% impairment rating to be invalid, there was no other impairment rating for the district court
to adopt. This is not necessarily the end of the matter, however. While no mechanism exists in the
Act to remand matters back to the Division, see Texas Workers’ Comp. Comm’n v. Texas Mut. Ins.
Co., 119 S.W.3d 886, 887 (Tex. App.—Dallas 2003, no pet.), Royal Indemnity concedes that, under
applicable law, DeLeon “is entitled to return to the Division to pursue a new impairment rating
determination,” and Royal Indemnity has represented to this Court in writing that it “will not take
a contrary position in this litigation.”
10