Maryland Casualty Co. v. Hendrick Memorial Hospital

• Decision Date: 17 March 1943
• Docket Number: No. 1930-8029.,1930-8029.
• Citation: 169 S.W.2d 969
• Parties: MARYLAND CASUALTY CO. v. HENDRICK MEMORIAL HOSPITAL et al.
• Court: Texas Supreme Court

169 S.W.2d 969

MARYLAND CASUALTY CO. v. HENDRICK MEMORIAL HOSPITAL et al.

No. 1930-8029.

Commission of Appeals of Texas, Section B.

March 17, 1943.

Rehearing Denied April 7, 1943.

Certified Questions from Court of Civil Appeals of Eleventh Supreme Judicial District.

Suit under the Workmen's Compensation Act by Hendrick Memorial Hospital and another to set aside an award of the Industrial Accident Board in favor of Maryland Casualty Company and to recover value of services rendered an injured employee after insurer failed or refused to provide such services. From a judgment for plaintiffs, insurer appeals. On certified questions from the Court of Civil Appeals.

Questions answered.

See, also, Tex.Civ.App., 169 S.W.2d 965.

Smith & Eplen, of Abilene, for appellant.

Scarborough, Yates & Scarborough, of Abilene, for appellee.

SMEDLEY, Presiding Judge.

This is a suit brought by a hospital and a physician against the insurer to recover, under the Workmen's Compensation Law, Vernon's Ann.Civ.St. art. 8306 et seq., the value of services rendered to an injured employee after the insurer failed or refused to provide such services.

Two questions have been certified to this Court by the Court of Civil Appeals for the Eleventh Supreme Judicial District, the first of which questions is: "Did the appellees (hospital and doctor) who rendered necessary services to the injured employee (Stewart) have a direct cause of action against the appellant (insurer) under the Workmen's Compensation Act of Texas?"

The material facts as shown by the certificate and the transcript are as follows: Mrs. Ethel Stewart, an employee or agent of L. B. Price Mercantile Company which was insured by Maryland Casualty Company, suffered an accidental injury. The insurer, after being duly notified of the injury, denied liability and refused or failed to furnish medical aid and hospital services. Thereupon Mrs. Stewart procured the services of Dr. Snow and in connection therewith necessary services of Hendrick Memorial Hospital.

Mrs. Stewart filed with the Industrial Accident Board a claim for compensation on account of her injury and thereafter, on June 11, 1941, filed suit against Maryland Casualty Company in the District Court of Jones County to set aside the Board's award and recover compensation. It appears that she made no claim, either before the Board or in her suit, for recovery of the cost of medical aid and hospital service incurred by her. Judgment in favor of Mrs. Stewart against Maryland Casualty Company was affirmed by the Court of Civil Appeals on July 10, 1942. Maryland Casualty Company v. Stewart, 164 S.W.2d 800.

Dr. Snow and Hendrick Memorial Hospital filed in their own names with the Industrial Accident Board their claims for services rendered to Mrs. Stewart within the first four weeks following the infliction of injury, and after their claims were denied by the Board they filed this suit, on August 1, 1941, in the County Court of Taylor County against the insurer, Maryland Casualty Company, to set aside the Board's award and to recover judgment for the reasonable value of their services. This suit was tried after the rendition of judgment in the District Court of Jones County in Mrs. Stewart's suit and while that case was on appeal to the Court of Civil Appeals for the Eleventh District. Maryland Casualty Co. v. Stewart, 164 S.W.2d 800. The judgment of the County Court in this case, in favor of Hendrick Memorial Hospital for $227.35 and in favor of Dr. Snow for $425, was affirmed by the Court of Civil Appeals on July 10, 1942, Associate Justice Funderburk dissenting. The questions were certified pending disposition of motion for rehearing in the Court of Civil Appeals.

Appellant, Maryland Casualty Company, contends that the judgment in favor of the physician and the hospital is erroneous for two reasons: because the Workmen's Compensation Law "does not give to servicing hospitals or attending physicians a direct cause of action" against the insurer; and because this suit should have been abated until the injured employee's claim had been finally adjudged to be compensable. In the two cases the principal defenses on the merits were that Mrs. Stewart was not in the course of her employment when she was injured and that she was an independent contractor rather than an employee.

The part of the compensation law which relates to medical aid and hospital service for the injured employee and the obligation of the insurer to provide such aid and service is Section 7 of Article 8306 of the Revised Civil Statutes of 1925, as amended by Acts of the Regular Session of the 46th Legislature, page 712, Section 1, Vernon's Annotated Civil Statutes, Art. 8306, § 7. This section of the law, omitting parts not relevant here, provides: "During the first four weeks of the injury, dating from the date of its infliction, the association shall furnish reasonable medical aid, hospital services and medicines * * *. If the association fails to so furnish same as and when needed during the time specified after notice of the injury to the association or subscriber, the injured employé may provide said medical aid, hospital service and medicines at the cost and expense of the association. The employé shall not be entitled to recover any amount expended or incurred by him for said medical aid, hospital services or medicines nor shall any person who supplied the same be entitled to recover of the association thereof, unless the association or subscriber shall have had notice of the injury and shall have refused, failed or neglected to furnish it or them within a reasonable time."

The first of the two certified questions was directly decided by the Court of Civil Appeals for the Ninth District in Home Life & Accident Ins. Co. v. Cobb, 220 S.W. 131. In that case a physician made claim and brought suit under the Workmen's Compensation Law for the value of services rendered by him to the injured employee who procured him after the insurer, with notice of the injury, had failed to provide medical aid. The contention was made that the Workmen's Compensation Law then in effect, being the Act of 1917 (Chap. 103, Acts Regular Session 35th Legislature, Vernon's Ann.Civ.St. art. 8306 et seq.,), in the absence of contract between the insurer and the physician, gave the physician no cause of action against the insurer. The court, noting the difference between Section 7, Part 1, of the Act of 1917, and the corresponding section of the prior law, the Act of 1913 (Chap. 179, Acts Regular Session 33rd Legislature), held that Section 7, Part I, of the later Act, which is in all respects material herein identical with Section 7 of Article 8306 of the Revised Civil Statutes of 1925, directly gave a cause of action to the physician.

Chief Justice Gallagher, who wrote the opinion in Texas Employers' Ins. Ass'n v. Herron, Tex.Civ.App., 29 S.W.2d 524, 529, said, after stating the substance of Section 7 of Article 8306: "The clear import of said provisions is that the right to recover the cost of such services [medical and hospital] accrues to the injured employee, if incurred by him, or to the party or parties furnishing the same." That case was a suit by the surviving widow and children to recover compensation for the death of an employee and to recover for medical and hospital bills incurred by him, but the sentence above quoted from the opinion is the deliberate interpretation of the statute by a very careful and able judge. This interpretation of the statute is embodied in the text of Texas Jurisprudence, Volume 45, page 672, section 218.

Judgment in favor of physicians against the insurer was reformed and affirmed in Lumbermen's Reciprocal Ass'n v. Wilmoth, Tex.Com.App., 12 S.W.2d 972. They had filed their claims in their own names, and after the award of the Board to the employee for his injury and to the physicians for their services, judgment was rendered in favor of the physicians in the suit filed by the insurer, against them and the employee as defendants, to set aside the award. In the same case it was held that the trial court should not have permitted another physician to intervene in the suit, because his claim had never been presented to the Board.

In a number of cases the courts of civil appeals, without directly deciding the question here under consideration, have assumed that a physician or hospital has the right under the statute to institute and maintain a claim and suit directly against the insurer and independently of the employee's claim or suit. Southern Surety Co. v. Beaird, Tex.Civ.App., 235 S.W. 240; Ætna Life Ins. Co. v. Culvahouse, Tex.Civ.App., 10 S.W.2d 803; Texas Employers' Ins. Ass'n v. Wilson, Tex.Civ. App., 21 S.W.2d 599; Commercial Standard Ins. Co. v. City Memorial Hospital, Tex.Civ.App., 107 S.W.2d 724; Federal Underwriters Exchange v. Barclay, Tex. Civ.App., 149 S.W.2d 215. We have found no Texas case holding that the physician or hospital rendering necessary services to the injured employee, after notice of the injury to the insurer and its failure or refusal to furnish such services, does not have under the statute a direct cause of action against the insurer.

The practice of the Industrial Accident Board has been to consider the claim of the physician or hospital and the claim of the injured employee together and to act upon them at the same time, but the Board has uniformly construed Section 7 of Article 8306 as authorizing it to accept and act upon claims filed by physicians and hospitals independently of the employee's claim for compensation for his injury and many awards have been made by the Board on such claims. Judicial notice may be taken of the Board's construction of the statute and practice under it. Cathey and Carrell v. Terrell, 121 Tex. 130, 132, 45 S.W.2d 956; Short v. W. T. Carter & Bro., 133 Tex. 202, 211, 126 S.W.2d 953.

The rule in most of the other states is that "proceedings by a physician for...