City of Houston v. Christopher A. Rhule ( 2011 )

Dissenting opinion issued July 21, 2011

In The

Court of Appeals

For The

First District of Texas

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NO. 01-09-01079-CV

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City of Houston, Appellant

V.

Christopher Rhule, Appellee

On Appeal from the 281st District Court

Harris County, Texas

Trial Court Case No. 0579440

DISSENTING OPINION

          Christopher Rhule suffered a tragic injury in the line of duty serving as a City of Houston firefighter.  There is no dispute that for his sacrifice, Rhule justly deserved to be compensated.  There was, however, a dispute about the amount of workers’ compensation that would be paid to Rhule, and that matter was resolved by a settlement agreement.

          The validity of a waiver of governmental immunity depends on the waiver being clear and unambiguous as to its scope.  See, e.g., Tex. Gov’t Code Ann. § 311.034 (West Supp. 2010); Travis Cent. Appraisal Dist. v. Norman, No. 09-0100, 2011 WL 1652133, at *4 (Tex. Apr. 29, 2011).  In the case of the workers’ compensation system, the available remedies are limited and exclusive.  See, e.g., Tex. Labor Code Ann. § 408.001 (West 2006); HCBeck, Ltd. v. Rice, 284 S.W.3d 349, 352 (Tex. 2009).  Remedies not clearly and unambiguously included in the workers’ compensation system are therefore not included in the scope of the waiver of governmental immunity.  See, e.g., City of LaPorte v. Barfield, 898 S.W.2d 288, 297 (Tex. 1995) (“The rule that a waiver of immunity must be clear and unambiguous applies to both the existence and the extent of the waiver.”).

          The City of Houston asserts immunity from Rhule’s suit for breach of the settlement agreement, but only to the extent the claim seeks monetary relief for physical pain and mental anguish allegedly resulting from the City’s breach of contract.  Those theories of recovery were not available among the statutory remedies for Rhule’s original workers’ compensation claim.  At the time of Rhule’s original claim, his sole recoverable remedies were (1) a percentage of his average weekly wage, up to a statutory maximum, and for no more than 401 weeks, (2) reasonable and necessary medical expenses, and (3) attorney’s fees awarded as a percentage of any income benefits received.[*] 

The common-sense principle that a governmental entity does not expand the scope of the waiver of its immunity by settling a claim as to which it was not immune was a critical assumption underlying the decision in Texas A & M University-Kingsville v. Lawson, 87 S.W.3d 518 (Tex. 2002).  Lawson held that when the State enters into a settlement agreement to resolve a claim for which it has waived immunity, it cannot thereafter claim immunity against a claim for breach of the settlement agreement. See id. at 522–53.  In holding that the “State should not regain waived immunity by settling a case,” a plurality of the Texas Supreme Court noted that its holding assumed that “a governmental entity would not, in settling a suit for which immunity has been waived, undertake an obligation that exposes it to liability much greater or different than that which it faced from the original claim.”  Id. at 522.  Relying on that logic, our Court has previously held that there is no waiver of immunity to suit for a claimed breach of a settlement agreement when the State was immune from the settled claim.  See Porretto v. Patterson, 251 S.W.3d 701, 712 (Tex. App.—Houston [1st Dist.] 2007, no pet.).

          This is not a case in which a governmental entity would reclaim waived immunity by asserting immunity from a suit for breach of a settlement agreement.  The City was immune from the outset from suit for claims of pain and suffering or mental anguish.  In settling a workers’ compensation claim, no rational governmental entity would agree to provide greater remedies than those available through the workers’ compensation system and for which immunity already had been waived.  And unless the claimant were willing to settle his claim for something of lesser value than the lowest reasonable settlement value for the remedies available in the workers’ compensation system (certainly a rare circumstance and something no party has suggested happened in this case), a rational governmental entity would only agree in settlement to provide a remedy within the universe of outcomes available in the workers’ compensation process (or of equivalent value). 

The majority’s holding may lead state governmental entities to be reluctant to agree to provide lifetime medical benefits to workers’ compensation claimants for fear that a future dispute over the provision of such benefits could expose the entity to mental anguish damages and other remedies that would not be available to the claimant so long as the government simply litigates the claim to the conclusion of the administrative and legal process.  In this case, the City agreed to provide a remedy that could have resulted from the workers’ compensation claim resolution process (i.e. lifetime medical benefits and a fixed amount of cash). Only the fact of a settlement agreement is now alleged to support Rhule’s claim for pain and suffering and mental anguish damages.  The fact of a settlement agreement with Rhule should not render the City subject to responding to a suit alleging theories of recovery from which it would be immune if it had refused to settle and the outcome of the claims process had been the same.  The law of governmental immunity does not permit this undesirable result.  

Rhule acknowledges that the City was self-insured.  To the extent that a workers’ compensation claimant may assert a claim in connection with the care, skill, or reasonable expedience and faithfulness with which a claim is paid by a workers’ compensation carrier, that claim arises not under the statutory workers’ compensation scheme, but instead under an independent common-law duty of good faith and fair dealing recognized by the Texas Supreme Court in Aranda v. Insurance Company of North America, 748 S.W.2d 210, 212–13 (Tex. 1988).  The Legislature has specified that a tort action for breach of that duty, if any, may only be asserted against a governmental entity consistent with the Texas Tort Claims Act.  See Tex. Labor Code Ann. § 416.002(b) (West 2006); see also Tex. Civ. Prac. & Rem. Code Ann. §§ 101.001–.109 (Texas Tort Claims Act); Jackson v. City of Galveston, 837 S.W.2d 868, 870–71 (Tex. App.—Houston [14th Dist.] 1992, writ denied) (characterizing provision of workers’ compensation benefits as governmental function).  Courts traditionally defer to the Legislature on the waiver of governmental immunity, assuming it to be “better suited to balance the conflicting policy issues associated with waving immunity.”  Norman, 2011 WL 1652133, at *4 (quoting Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692, 695 (Tex. 2003)).  It is contrary to the Legislature’s intent as expressed in Labor Code section 416.002(b) to allow this suit to proceed against a governmental entity for what is essentially a tort recovery (i.e., pain and suffering or mental anguish damages) arising from a failure to provide workers’ compensation benefits.

The City’s plea to the jurisdiction should have been granted, and I respectfully dissent from the panel majority’s contrary conclusion.

                                                                   Michael Massengale

                                                                   Justice

Panel consists of Justices Keyes, Sharp, and Massengale.

Justice Massengale, dissenting.

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[*]           Because Rhule’s injury occurred in 1988, his claim was governed by the “old” worker’s compensation act.  See generally Act of May 26, 1981, 67th Leg. R.S., ch. 861, § 1, 1981 Tex. Gen. Laws 3290, 3290 (formerly codified at Tex. Rev. Civ. Stat. art. 8306 § 10), repealed by Act of Dec. 12, 1989, 71st Leg., 2nd C.S., ch. 1, § 16.07(7), 1989 Tex. Gen. Laws 1, 114; Act of Mar. 6, 1969, 61st Leg. R.S., ch. 18, § 4, 1969 Tex. Gen. Laws 48, 49 (formerly codified at Tex. Rev. Civ. Stat. art. 8306, § 11), repealed by Act of Dec. 12, 1989, 71st Leg., 2nd C.S., ch. 1, § 16.01(7), 1989 Tex. Gen. Laws 1, 114; see also Act of Dec. 12, 1989, 71st Leg., 2d C.S., ch. 1, § 15.47, 1989 Tex. Gen. Laws 1, 113 (formerly codified as Tex. Rev. Civ. State. Art. 8309h, § 3), repealed by Act of May 12, 1993, 73rd Leg., R.S., ch. 269, 1993 Tex. Gen. Laws 987, 1250. The Legislature codified the current worker’s compensation system in the Labor Code as the Texas Workers’ Compensation Act.  See Tex. Labor Code Ann. §§ 401.001–419.007 (West 2006 & Supp. 2010); see also Tex. Labor Code Ann. §§ 504.001–.073 (West 2006 & Supp. 2010) (providing for worker’s compensation insurance coverage for employees of political subdivisions).