Am. Zurich Ins. Co. v. Samudio, 01-08-00233-CV.

Citation317 S.W.3d 336
Decision Date11 June 2010
Docket NumberNo. 01-08-00233-CV.,01-08-00233-CV.
CourtCourt of Appeals of Texas

317 S.W.3d 336

Daniel SAMUDIO, Appellee.

No. 01-08-00233-CV.

Court of Appeals of Texas,
Houston (1st Dist.)

Feb. 11, 2010.
Rehearing Overruled June 11, 2010.

317 S.W.3d 337


317 S.W.3d 338


317 S.W.3d 339
Gregory D. Solcher, Robert D. Stokes, Flahive, Ogden & Latson, Austin, TX, for Appellant.

Byron C. Keeling, Keeling & Downes, P.C., David Q. Haag II, Michael P. Doyle, Doyle Raizner LLP, Ruth Brett Downes, Keeling & Downes, P.C., Houston, TX, for Appellee.

Panel consists of Chief Justice RADACK, and Justices ALCALA and HIGLEY.

Appellant, Zurich American Insurance Company (Zurich), a workers' compensation carrier, appeals from the trial court's

317 S.W.3d 340
judgment awarding attorney's fees to Daniel Samudio, appellee, and dismissing its appeal for lack of subject matter jurisdiction. Zurich had filed a petition for judicial review of a final decision by the Texas Department of Insurance Division of Workers' Compensation (Division) that held Daniel Samudio, appellee, had a 20 percent impairment rating. In three issues, Zurich asserts that (1) the trial court had jurisdiction to determine whether Samudio's impairment rating complied with the Texas Workers' Compensation Act, (2) Samudio's plea to the jurisdiction, taken to its logical extension, would obviate summary judgment practice, and (3) the trial court should not have ordered Zurich to pay Samudio's attorneys' fees. We conclude that (1) the trial court properly dismissed Zurich's judicial review action because it did not have jurisdiction under the Texas Workers Compensation Act to effect the remedies sought by Zurich, (2) a plea to the jurisdiction is a proper procedural vehicle for challenging a trial court's subject matter jurisdiction, and (3) the trial court properly ordered Zurich to pay Samudio's reasonable and necessary attorney's fees because Samudio was the prevailing party in the lawsuit.

We affirm.


While in the course of his employment, Samudio sustained a compensable injury to his back when he fell off a ladder. Samudio had four surgeries to repair his back, including a laminectomy and a multilevel spinal fusion. Samudio's surgeons did not order preoperative flexion or extension x-rays before surgically operating on his back.

His employer carried worker's compensation insurance coverage through Zurich. After his injury, Samudio filed a workers' compensation claim with the Division, the Texas administrative agency that administers the Texas Workers' Compensation Act.1 Under the Act, an injured worker may become entitled to receive impairment income benefits, which are based on an impairment rating assigned by a physician.2 In determining the existence and degree of an injured worker's permanent impairment, the Division is required to use the fourth edition of the Guides to the Evaluation of Permanent Impairment, published by the American Medical Association (AMA). 3

The principal methodology found in the fourth edition of the Guides is its injury model, which uses objectively verifiable evidence to place patients into one of eight diagnosis-related estimate (DRE) categories.4 Depending on which DRE category the patient falls into, the examining doctor will assign the patient a particular impairment

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rating. In cases where spinal fusion surgery is performed, the Guides require the examining doctor to base the rating on pre-operative flexion and extension roentgenograms (x-rays). 5

Confusion existed in the medical community regarding how to rate claimants who lacked preoperative flexion and extension x-rays. To address this confusion, the Division issued Advisory 2003-10 and Advisory 2003-10B, in 2003 and 2004, respectively. The second advisory added an additional section to the first. The advisories attempted to provide an alternative standard for assessing a DRE category in cases where there are no preoperative x-rays.6

The advisories included a controversial provision that stated “[i]f preoperative x-rays were not performed, the rating may be determined using the following criteria: ... b. Multilevel fusion meets the criteria for DRE Category IV, Structural Inclusions, as this multilevel fusion is equivalent to ‘multilevel spine segment structural compromise’ per DRE IV.” In other words, under the Division's Advisories, an examining doctor could include evidence of a spinal fusion surgery in assessing which DRE category the claimant belonged.

The Division appointed Dr. Gason Machado, M.D., to act as a designated doctor for assignment of Samudio's impairment rating. He conducted his examination in 2004. In his “Report of Medical Evaluation” that he distributed to the Division, Dr. Machado stated that used the Guides to calculate Samudio's impairment rating as 20 percent based on qualifications found in DRE Category IV. In a later “Letter of Clarification,” Dr. Machado clarified that his evaluation was also based upon the Advisories. He stated that he had used the Advisories because the only set of x-rays was a series of lumbar x-rays from 2002 that were inconclusive. As there were no pre-operative flexion or extension x-rays of Samudio, and because Dr. Machado believed the set of x-rays taken of Samudio were inconclusive, in accordance with Advisory 2003-10 and Advisory 2003-10B, the doctor included Samudio's spinal fusion surgery as a factor in his conclusion that Samudio fell within DRE Category IV. Dr. Machado explained:

TWCC Advisory 2003-10 and Advisory 2003-10b both state that when examining an injured worker who has had spinal surgery, the rating is to be determined by preoperative x-ray tests for motion segment integrity. If those x-rays are not available, the type of surgery can be used to rate the individual. In this case, the pre-operative films do not appear to be motion studies; therefore, I believe I was correct in using the type of surgery to determine the impairment rating.

In November 2005, the Division conducted a benefit contested case hearing (the Hearing) to resolve two issues. The Division ruled in favor of Zurich on the first issue by determining Zurich's contest of the impairment rating was timely. No one challenges that ruling in this case.

The second issue concerned Samudio's “impairment rating.” Zurich disputed Dr. Machado's 20 percent impairment rating on the ground that the doctor used the Division's Advisories to help formulate his impairment rating. In support of its position, Zurich offered a letter from John Obermiller, M.D., who criticized Dr. Machado's impairment rating, stating that Dr. Machado's evaluation was “not in accordance with the AMA Guides” and that Dr. Machado was “confusing the declarations

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of TWCC advisory 2003-10b....” Dr. Obermiller expressly stated in his letter that he was not providing an impairment rating on Samudio, but was instead explaining why, in his opinion, Dr. Machado's opinion was erroneous. This was the only evidence Zurich provided to the Division to contest Dr. Machado's impairment rating. Zurich did not present an alternative impairment rating.

After considering all the evidence including Dr. Obermiller's comments, the Hearing Officer concluded that Samudio's impairment rating was 20 percent based on Dr. Machado's 20 percent impairment rating certification. The Hearing Officer issued a written opinion with his findings and one of those findings specifically determined that there was only one impairment rating.

Zurich appealed the decision at the Hearing to the Division's appeals panel. In February 2006, the Division's appeals panel notified the parties that the Hearing Officer's decision was final.

In March 2005, Zurich appealed the Division's decision to the trial court. In its original petition, Zurich asked the trial court to either hold Samudio had no impairment rating at all, or determine that Samudio's impairment rating was 10 percent rather than 20 percent. It also requested that the trial court abate proceedings until the Austin Court of Appeals issued a final ruling in Lumbermens Mut. Co., regarding the validity of Advisories 2003-10 and 2003-10B. In October 26, 2006, the Austin Court of Appeals held that the advisories were invalid and enjoined their continued use by the Division.7 Following the Texas Supreme Court's denial of the petition challenging the Lumbermens decision, the Division issued Texas Department of Insurance Commissioners' Bulletin No. B-0033-07 in July 2007, which provides that Advisories 2003-10 and 2003-10B “shall no longer be used in determining impairment ratings.” 8

In August 2007, Samudio filed a plea to the jurisdiction with a request that the trial court dismiss Zurich's lawsuit for lack of subject matter jurisdiction. Samudio contended that Zurich failed to raise a justiciable controversy because the trial court was required to adopt an impairment rating presented to the Division in the underlying proceedings before the agency, and only one rating, the 20 percent rating, had been introduced at the Division level. In October 2007, the trial court granted Samudio's plea to the jurisdiction and dismissed the case.

In February 2008, Samudio filed an additional motion for attorney's fees pursuant to section 408.221 of the Labor Code.9 Soon afterwards, the trial court rendered a final judgment in Samudio's favor, expressly noting that Samudio was “the prevailing party on all issues” and noting that it would enter a separate order regarding attorney's fees. In March 2008, the trial court awarded Samudio $29,246 in attorney's fees through the date of the final judgment, plus appellate fees of up to $42,000 on the condition that Samudio prevail on appeal. Zurich subsequently appealed to this court.

The Trial Court's Jurisdiction

In Zurich's first issue, it asserts the trial court erred in granting Samudio's plea to the jurisdiction because the trial court had

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