Texas Department of Insurance – Division of Workers' Compensation v. Ronald Mensch , 457 S.W.3d 163 ( 2015 )

Fourth Court of Appeals
San Antonio, Texas
OPINION
No. 04-14-00449-CV
TEXAS DEPARTMENT OF INSURANCE – DIVISION OF WORKERS’
COMPENSATION,
Appellant
v.
Ronald MENSCH,
Appellee
From the 73rd Judicial District Court, Bexar County, Texas
Trial Court No. 2010-CI-02326
Honorable Barbara Hanson Nellermoe, Judge Presiding
Opinion by: Sandee Bryan Marion, Chief Justice
Sitting: Sandee Bryan Marion, Chief Justice
Karen Angelini, Justice
Luz Elena D. Chapa, Justice
Delivered and Filed: January 14, 2015
REVERSED AND RENDERED
The Texas Department of Insurance, Division of Workers’ Compensation (“the Division”)
appeals from the trial court’s denial of its plea to the jurisdiction in which it alleged the trial court
lacked jurisdiction over the lawsuit filed by Ronald Mensch because Mensch failed to exhaust his
administrative remedies. We reverse and render a dismissal in favor of the Division.
BACKGROUND
Mensch was injured on June 9, 1980, in a work-related accident when a tire rim struck him
in the face. State Farm Insurance, the workers’ compensation insurance carrier, paid for medical
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expenses related to Mensch’s teeth until 2008, at which time State Farm refused to pay any
additional medical benefits for his teeth. Mensch filed suit, State Farm filed a plea to the
jurisdiction, and the lawsuit was abated for a pre-hearing conference before the Division. On
October 19, 2011, the Division rendered a final judgment that Mensch’s injury was in the course
and scope of his employment and he was entitled to lifetime medical benefits for those injuries.
Mensch’s lawsuit against State Farm was then reinstated.
Thereafter, Mensch approached State Farm for pre-approval of additional dental work
costing in the range of $50,000 to $75,000. State Farm denied the request for pre-approval on the
grounds that, under governing law, those medical services had to first be rendered to the employee
before being presented to the carrier. A second pre-hearing conference before the Division was
held on February 11, 2014, at which Mensch requested preauthorization for additional dental work
and he presented an affidavit from his doctor stating he needed another dental procedure to treat
his compensable injury. On May 7, 2014, the Division sent a letter to Mensch’s attorney stating
the initial award issued on October 19, 2011 had become final; therefore, the Division’s authority
to act on further medical benefits was limited to the procedures set forth in Article 8307, section
5, of the Texas Civil Statutes in effect at the time of his injury. The Division further stated that its
continuing jurisdiction to render successive awards was limited to costs or expenses of items
actually furnished to and received by Mensch; therefore, the Division had “no authority to
preauthorize the dental procedure.” The letter ended by stating “[u]ntil incurred and itemized bills
are presented to the carrier, the [Division] has no jurisdiction to act on the carrier’s liability to
furnish medical benefits, and the [Division would] take no further action on the claim.” Mensch
then amended his lawsuit to add the Division seeking a declaration that the Division has
jurisdiction to determine whether he is entitled to the additional dental work and that he had
exhausted his administrative remedies and was entitled to seek medical benefits from State Farm.
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The Division and State Farm each filed pleas to the jurisdiction, which were both denied.
State Farm filed a petition for writ of mandamus, which is pending before this court in appellate
cause number 14-14-00519-CV. The Division filed this underlying interlocutory accelerated
appeal. On appeal, the Division argues the “old” workers’ compensation law requires Mensch to
first receive medical treatment and pay for that treatment before he can present his claim to the
Division for adjudication. The Division asserts that because Mensch has not yet received and paid
for his medical care, the Division has no authority to “adjudicate” or “pre-approve” his claim and,
thus, the trial court lacks jurisdiction to consider Mensch’s complaint against the Division.
THE “OLD” WORKERS’ COMPENSATION LAW
There is no dispute that Mensch’s claim is governed by the Workers’ Compensation Act
in effect at the time of his injury in 1980—Article 8306, section 7, and Article 8307, section 5.
See Act of Mar. 28, 1917, 35th Leg., R.S., ch. 103, 1917 Tex. Gen. Laws 269, 269 (repealed 1989)
(current version of Texas Workers’ Compensation Act at TEX. LABOR CODE ANN. ch. 408 (West
2006 & Supp. 2014)); see also City of Houston v. Rhule, 417 S.W.3d 440, 442 (Tex. 2013) (statute
in effect at the time of injury controls). 1
On appeal, the Division relies on section 5 of Article 8307, which, in pertinent part,
provided as follows: “Notwithstanding any other provision of this law . . . no award of the Board,
and no judgment of the court . . . shall include in such Award or Judgment any cost or expense of
any such items not actually furnished to and received by the employee prior to the date of said
award or judgment.” TEX. REV. CIV. STAT. ANN. art. 8307, § 5 (emphasis added). The Division
argues that under section 5, the additional dental work has not yet been furnished to and received
1
The Act was further revised in 1989 with revisions not taking effect until January 1, 1991. See Act of Dec. 12, 1989,
71st Leg., 2nd C.S., ch. 1, 1989 Tex. Gen. Laws 1, 115.
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by Mensch; therefore, Mensch cannot present his claim to the Division for adjudication, nor can
he seek a judgment in court. The Division argues Mensch must first receive and pay for the
additional dental work, and then exhaust his administrative remedies by submitting the claim to
the Division for a determination of whether the treatment is related to his compensable injury and
whether the cost of the treatment is reasonable and necessary. The Division concludes that because
Mensch did not exhaust his administrative remedies, the trial court lacks jurisdiction over his
claims.
Mensch, on the other hand, relies on section 7 of Article 8306, which, in pertinent part,
provided as follows: “The employee shall have the sole right to select or choose the persons or
facilities to furnish medical aid, chiropractic services, hospital services, and nursing and the
association shall be obligated for same or, alternatively, at the employee’s option, the association
shall furnish such medical aid, hospital services, nursing, chiropractic services, and medicines as
may reasonably be required at the time of the injury and at any time thereafter to cure and
relieve from the effects naturally resulting from the injury.” TEX. REV. CIV. STAT. ANN. art.
8306, § 7, repealed by Acts 1989, 71st Leg., 2nd C.S., ch. 1, § 16.01(7) to (9), eff. Jan. 1, 1991
(West Supp. 1994). Mensch argues section 7 (1) provides him with medical services for life, (2)
requires State Farm to “furnish” his medical care, (2) does not require him to bear the cost of his
treatment and then seek reimbursement, and (4) at most, State Farm could only contend the charges
were not reasonable and necessary. 2
To resolve the issue on appeal, we turn to the interplay between Article 8306, section 7,
and Article 8307, section 5. 3 Before 1957, Article 8306, section 7, provided, generally, that the
2
In his brief, Mensch refers to State Farm, but State Farm is not a party to this appeal.
3
None of the cases on which Mensch relies support his argument. Mensch cites to Employers Mutual Casualty Co.
v. Poorman, 428 S.W.2d 698, 701 (Tex. Civ. App.—San Antonio 1968, writ ref’d n.r.e.) for the proposition that his
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insurer should furnish reasonable medical and hospital services for an injured worker during the
first four weeks following injury and, on proper weekly certificates, should furnish additional
medical services for a total period not exceeding ninety-one days and additional hospital services
for a total period not exceeding 180 days. See Tex. Cas. Ins. Co. v. Beasley, 391 S.W.2d 33, 39
(Tex. 1965) (op. on reh’g). In 1957, section 7 was amended to remove the time limitation on the
insurer’s liability for medical and hospital services and the need for weekly certificates. Id. The
Act of 1957 also added a new paragraph to Article 8307, section 5, which stated:
Notwithstanding any other provision of this law, as amended, no award of the
Board, and no judgment of the court, having jurisdiction of a claim against the
association for the cost or expense of items of medical aid, hospital services,
nursing, chiropractic services, medicines or prosthetic appliances furnished to an
employee under circumstances creating a liability therefor on the part of the
association under the provisions of the law, shall include in such Award or
Judgment any cost or expense of any such items not actually furnished to and
received by the employee prior to the date of said award or judgment. The first
such final Award or Judgment rendered on such claim shall be res judicata of the
liability of the association for all such cost or expense which could have been
claimed up to the date of said award or judgment and of the issue that the injury of
said employee is subject to the provisions of this law with respect to such items,
but shall not be res judicata of the obligation of the association to furnish or pay for
any such items after the date of said Award or Judgment. After the first such final
award or judgment, the Board shall have continuing jurisdiction in the same case
to render successive awards to determine the liability of the association for the cost
or expense of any such items actually furnished to and received by said employee
not more than six (6) months prior to the date of each such successive award, until
the association shall have fully discharged its obligation under this law to furnish
all such medical aid, hospital services, nursing, chiropractic services, medicines or
argument on appeal was “adopted by this Court when it held that judgments cannot extinguish the ‘obligation of the
association to furnish or pay for such items after the date of said award or judgment.’” That was not the holding of
the court, but instead, is a portion of section 5 quoted by this court. The Poorman court actually held as follows: “The
right to recover for necessary medical services after the trial is a valuable benefit under said Act which is limited by
the safeguard that recovery is limited to the services actually furnished. The amount recoverable for these services is
determined after same are furnished. To make certain that the employee will receive all of his required future medical
services, the Legislature expressly directed that the award or judgment include only the expenses for medical services
received prior to entry of same. Under the plain wording of Sec. 5, Art. 8307, the judgment entered in this case should
not have included an item for the reasonable cost of future hospital and medical services.” Id. at 701. Another case
cited by Mensch, Texas Employers Insurance Association v. Chappell, 494 S.W.2d 159 (Tex. 1973), dealt with notice,
and the employee had already incurred the expenses. Finally, Pearce v. Texas Employers Insurance Association, 403
S.W.2d 493 (Tex. Civ. App.—Dallas 1966), writ ref’d n.r.e., 412 S.W.2d 647 (Tex. 1967), dealt with a compromise
settlement agreement and held section 5 had no application to compromise settlement agreements approved by the
Board pursuant to Article 8301, section 12.
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prosthetic appliances to which said employee may be entitled; provided, each such
successive award of the Board shall be subject to a suit to set aside said award by a
court of competent jurisdiction in the same manner as provided in the case of other
awards under this law.
TEX. REV. CIV. STAT. ANN. art. 8307, § 5.
“[T]hese 1957 amendments require the insurer to furnish all medical services as may
reasonably be required to cure and relieve the employee from the effects naturally resulting from
his injury, but . . . Section 5, Art. 8307, prohibits the rendition of an award of judgment for future
medical expenses in a workmen’s compensation case.” Employers Mut. Cas. Co. v. Poorman, 428
S.W.2d 698, 701 (Tex. App.—San Antonio 1968, writ ref’d n.r.e.). The section 5 safeguards,
embodied in the “res judicata provisions,” provide that no award or judgment is authorized for
such additional expenses unless and until the services are actually furnished. Id. Specifically,
section 5 provides that the first final award or judgment rendered on an employee’s claim shall be
res judicata (1) on the issue of the insurer’s liability for all such costs or expenses that could have
been claimed up to the date of the first final award or judgment, and (2) on the issue that the
employee’s injury is subject to the provisions of this law with respect to such items. TEX. REV.
CIV. STAT. ANN. art. 8307, § 5. However, the first final award or judgment shall not be res judicata
of the insurer’s obligation to furnish or pay for any such items after the date of the first final award
or judgment. Id. As to any costs or expenses after the date of the first final award or judgment,
section 5 gives the Division “continuing jurisdiction” to render “successive awards” for future
medical expenses. Id.; see also Pearce v. Tex. Employers Ins. Ass’n, 403 S.W.2d 493, 498 (Tex.
Civ. App.—Dallas 1966) writ ref’d n.r.e., 412 S.W.2d 647 (Tex. 1967). This ensures the employee
will be able to obtain medical care and related expenses after the final judgment.
However, to safeguard the insurer, the “res judicata provisions” provide that the employee
is not entitled to receive successive awards for future medical expenses until the cost or expense
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of any future medical care is actually furnished to and received by the employee before the date of
any successive award. See Poorman, 428 S.W.2d at 701. Thus, the obvious purposes of the
paragraph added to section 5 of Article 8307 was to (1) implement the unlimited medical and
hospital provisions of section 7 of Article 8306; and (2) provide certain safeguards for both the
employee and the insurer. Poorman, 428 S.W.2d at 701; Pearce, 403 S.W.2d at 498.
As noted previously, there is no dispute that the “old” workers’ compensation law applies
here because Mensch was injured in 1980. We conclude that, under the “old” law, Mensch is not
entitled to recover a judgment for any expenses he has not actually incurred. The first final award
by the Division on October 19, 2011, is res judicata as to medical care and related expenses Mensch
incurred prior to this date. After this date, the Division has continuing jurisdiction to render
successive awards to determine the cost or expense of any further medical care actually furnished
to and received by Mensch “not more than six (6) months prior to the date of each such successive
award, until the [insurer] shall have fully discharged its obligation under this law to furnish all
such medical aid, hospital services, nursing, chiropractic services, medicines or prosthetic
appliances to which [Mensch] may be entitled . . . .” TEX. REV. CIV. STAT. ANN. art. 8307, § 5.
Based on the provisions of Article 8307, section 5, Texas courts have long held that trial
courts do not have original jurisdiction over claims and disputes arising out of on-the-job injuries.
See Employers’ Indem. Corp. v. Woods, 243 S.W. 1085, 1087 (Tex. Comm’n App. 1922); Starnes
v. Tex. Employers’ Ins. Ass’n, 549 S.W.2d 46, 47 (Tex. Civ. App.—Dallas 1977, writ ref’d n.r.e.).
Thus, a party must pursue its administrative remedy first at the agency level, before seeking relief
in the district court. See Johnson v. American Gen. Ins. Co., 464 S.W.2d 83, 84 (Tex. 1971). The
failure to obtain an administrative ruling on an issue arising under the workers’ compensation
statute prevents a party from later invoking the jurisdiction of the court to resolve the issue.
Ankrom v. Dallas Cowboys Football Club, Ltd., 900 S.W.2d 75, 77 (Tex. App.—Dallas 1995, writ
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denied); Paradissis v. Royal Indem. Co., 496 S.W.2d 146, 150 (Tex. Civ. App.—Houston [14th
Dist.] 1973), aff’d, 507 S.W.2d 526 (Tex. 1974); Pacific Indem. Ins. Co. v. Liberty Mut. Ins. Co.,
834 S.W.2d 91, 93 (Tex. App.—Austin 1992, no writ). The requirement that an employee must
exhaust administrative remedies before seeking relief from a district court applies even after the
insurer’s liability for future benefits has been established. See Paradissis, 507 S.W.2d at 529-30
(affirming dismissal of action in district court for failure to exhaust administrative remedies as to
continuing medical services).
In this case, Mensch sought from both the Division and the trial court an adjudication of
medical care expenses he has not yet incurred. The “old” workers’ compensation law requires
Mensch to first receive the sought-after medical care and incur the related expenses. If the insurer
refuses to pay some or all of the expenses, Mensch must then pursue administrative remedies
before he may pursue a judicial remedy. Because Mensch did not pursue his administrative
remedies, the trial court lacked jurisdiction over his claims against the Division. Accordingly, the
trial court erred by denying the Division’s plea to the jurisdiction.
CONCLUSION
Because the trial court did not have subject-matter jurisdiction, we reverse the trial court’s
order denying the Division’s plea to the jurisdiction and render judgment dismissing Mensch’s
claims against the Division.
Sandee Bryan Marion, Chief Justice
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