Adrian Tijerina v. Texas Property Casualty Insurance Guaranty Association as Receiver for SIR Lloyd's Insurance Company and the Texas Department of Insurance, Division of Workers' Compensation

ACCEPTED
03-13-00300-CV
3790076
THIRD COURT OF APPEALS
AUSTIN, TEXAS
1/15/2015 5:07:44 PM
JEFFREY D. KYLE
CLERK
NO. 03-13-00300-CV
________________________________________________________
FILED IN
3rd COURT OF APPEALS
IN THE COURT OF APPEALS AUSTIN, TEXAS
FOR THE THIRD JUDICIAL DISTRICT1/15/2015 5:07:44 PM
AUSTIN, TEXAS JEFFREY D. KYLE
Clerk
________________________________________________________

ADRIAN TIJERINA,
Appellant,

v.

TEXAS PROPERTY AND CASUALTY INSURANCE GUARANTY
ASSOCIATION AS RECEIVER FOR SIR LLOYD’S INSURANCE
COMPANY, AND TEXAS DEPARTMENT OF INSURANCE, DIVISION
OF WORKERS’ COMPENSATION,
Appellees.
_________________________________________________________

APPELLEE TEXAS DEPARTMENT OF INSURANCE, DIVISION OF
WORKERS’ COMPENSATION’S NOTICE OF RECENT DECISION
__________________________________________________________

TO THE HONORABLE THIRD COURT OF APPEALS:

COMES NOW, Appellee, Texas Department of Insurance Division of

Workers’ Compensation, and herein files this Notice of Recent Decision in the

above captioned appeal and in support thereof will show the following:

I.

On January 14, 2015, the Fourth Court of Appeals issued an Opinion in Case

No. 04-14-00449-CV, styled Texas Department of Insurance- Division of Workers’

Compensation v. Ronald Mensch, a copy of such Opinion being attached hereto as
Exhibit A. In that case, the Fourth Court reversed the trial court’s denial of Texas

Department of Insurance Division of Workers’ Compensation’s (“TDI-DWC”)

Plea to the Jurisdiction and dismissed TDI-DWC from the case, because the

plaintiff in the trial court had failed to exhaust his administrative remedies and,

therefore, the trial court had no jurisdiction over TDI-DWC. The fact patterns of

this case and the Mensch case are remarkably similar in that both involve “old law”

workers’ compensation law and go to the ability of the injured worker to sue TDI-

DWC to force it to take jurisdiction over a matter not ripe for TDI-DWC’s

involvement. In essence, in both cases, the injured worker seeks a sort of pre-

authorization for medical services not yet provided.

The undersigned feels that the Mensch decision is directly on point with this

case or, at the very least, may be a useful and instructive tool for this Court in

determination of this matter.

Respectfully submitted,

KEN PAXTON
Attorney General of Texas

CHARLES E. ROY
First Assistant Attorney General

JAMES E. DAVIS
Deputy Attorney General for Civil Litigation

DAVID A. TALBOT, JR.
Division Chief, Administrative Law Division

2
 /s/ Dennis McKinney__________________
Assistant Attorney General
State Bar No. 13719300
OFFICE OF THE ATTORNEY GENERAL OF TEXAS
ADMINISTRATIVE LAW DIVISION
P. O. Box 12548, Capitol Station
Austin, Texas 78711-2548
Phone: (512) 475-4020
Fax: (512) 320-0167
dennis.mckinney@texasattorneygeneral.gov

Attorneys for the Texas Department of Insurance
Division of Workers’ Compensation

CERTIFICATE OF SERVICE

This is to verify that a true and correct copy of the foregoing Appellee’s
Notice of Recent Decision was sent to all parties of interest on this the 15th day of
January, 2015, to the following:

Greg Whigham Via Facsimile
MacInnes, Whigham & Siefken, LLP
3505 Northland Drive, Suite 205
Austin, Texas 78731
Phone: (512) 477-6813
Facsimile: (512) 477-7573
Attorneys for Appellee TPCIGA

Kevin B. Miller Via Facsimile
Mark A. Cevallos
Law Offices of Miller & Bicklein
4555 East University, Suite D-5
Odessa, Texas 79762
Phone: (432) 362-4878
Facsimile: (432) 362-4624
Attorneys for Appellant

/s/ Dennis McKinney__________________
DENNIS M. MCKINNEY
Assistant Attorney General
3
EXHIBIT A
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OPINION
No. 04-14-00449-CV

TEXAS DEPARTMENT OF INSURANCE _ DIVISION OF WORKERS'
COMPENSATION,
Appellant

Ronald MENSCH,
Appellee

From the 73rd Judicial DiStrict Courl, Bexar County, Texas
Trial Court No. 2010-Cl-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 Deparlment 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
 04-14-00449-Cv

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 finaljudgment 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

hiscompensableinjury. OnMayT,2014,theDivisionsentalettertoMensch'sattorneystating

the initial award issued on October 19,20ll 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 canier, 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,
a
 04-14-00449-CY

The Division and State Farm each filed pleas tb 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,

thu s' the tri ar cou rt the Div is i on

î:iïffi äïiïÏ*îÏ:":ii
There is no dispute that Mensch's claim is governed by the Workers' Compensation Act

in effect at the time of his injury in 198O-Article 8306, section 7,and Article 8307, section 5.

See Actof Mar. 28,1917,35th Leg., R,S., ch. 103,1917 Tex, Gen. Laws269,269 (repealed 1989)

(current version of Texas Workers' Compensation Act at TEX. Leeon Copp A¡rN. 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).r

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

qward or judgmenl." TEX, Rpv. Clv. Srar, AxN. art. 8307, $ 5 (emphasis added). The Division

argues that under section 5, the additional dental work has not yet been frirnished to and received

I Th.Artwas furtherrevised in 1989 with revisions nottakingeffectuntil January l,l99l . See Act of Dec. 12, 1989,
Tlst Leg.,2nd C,S,, ch. l, 1989 Tex. Gen. Laws I, I15,

3
 04-14-00449-CV

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 exhaJst 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 couft lacks jurisdiction over his

claims.

Mensch, on the other hand, relies on section 7 of Article 830ó, which, in pertinent paft,

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, alternaîively, at the employee's option, the ussociølion

shallfurnish such medical aid, hospital services, nursing, chiropractic services, and medicines øs

may reqsonably be required st the time of the injury ancl øt any time lhereafler lo cure and

relievefromlhe effects naturally resultingfromthe ínjuryi' Tpx. Rpv. Ctv. SrRr, AN|N. art,

8306, $ 7, repealed by Acts 1989,71s1 Leg., 2nd C,S., ch. l, $ 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

2ln his brief, Mensch refers to State Farm, but State Farm is not a pafty 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

4
 04-14-00449-CV

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 fi;rnish 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,39l S.W.2d 33,39

(Tex. 1965)(op.onreh'g). lnlg57,sectionTwasamendedtoremovethetimelimitationonthe

insurer's liability for medical and hospital services and the need for weekly cerlificates. 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 thatthe employee will receive all of his required future medical
services, the Legislature expressly directed that the award orjudgment 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
nothaveincludedanitemforthereasonablecostoffuturehospital andmedical seryices," Id.at70l. Anothercase
cited by Mensch, Texas Employers Insurance Associationv. Chappell,494 S,W.2d 159 (Tex. 1973), dealtwith notice,
and the employee had already incurred the expenses. Finally, Peqrce v. Texas Employers Insurance Associalion,403
S,W.2d 493 (Tex, Civ, App,-Dallas 1966), writ ref'd n.r,e.,412 S,\ry,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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 04-14-00449-CV

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. Ctv. SrRr. 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, prohibitstherendition of an award ofjudgmentforfuture

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 refld 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 jJdgment rendered on an employee's claim shall be

res judicata (l) on the issue of the insurer's liabilify for allsuch 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. Tpx. Rpv,

Cry. Srer, 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 frnal 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 a\ryards" 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 finaljudgment.

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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 04- I 4-00449-CV

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 af 701. Thus, the obvious purposes of the

paragraph added to section 5 of Article 8307 was to (l) 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 at70l) 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 19,201l, 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 finsurer] 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 fMensch] may be entitled . . . ." TEX. RPv. Cry. Sr,qr. A¡w, art. 8307, $ 5.

Based on the provisions of Article 8307, section 5, Texas courts have long held that trial

courts do not have originaljurisdiction over claims and disputes arising out of on-the-job injuries.

See Employers' Indem. Corp, v. úI/oods,243 S.W, 1085, 1087 (Tex. Comm'n App' 1922); Størnes

v. Tex. Employers'Ins, Ass'n,549 S.W.2d 46,47 (Tex. Civ. App.-Dallas1977, writ refd n.r.e.).

Thus, a party must pursue its administrative remedy first at the agency level, before seeking relief

in the district court. See Johnsonv. 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 courl to resolve the issue.

Anlcromv. Dallas Cowboys Football Club, Ltd.,900 S,W.2d 75,77 (Tex. App.-Dallas 1995, writ
-7 -
 04-14-00449-CV

denied); Paradissisv. Royal Indem. Co.,496 S.W.2d 146,150 (Tex. Civ. App.-Houston Il4th

Disr.l 1973), aff'd,507 S,W,2d 526 (Tex. 1974); Paci/ìc Indem, Ins. Co. v. Liberty MuL 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 courl applies even after the

insurer's liability for future benefits has been established. See Pqradissrs, 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 courl'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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