Argonaut Ins. Co. v. Baker

• Decision Date: 20 June 2002
• Docket Number: No. 01-0287.,01-0287.
• Parties: ARGONAUT INSURANCE COMPANY, Petitioner, v. Debbie BAKER, individually and as next friend of Anthony Baker, an incapacitated person, and as next friend of M.B., a minor, and Leighla Baker, and Rockey Baker, Respondents.
• Court: Texas Supreme Court

87 S.W.3d 526

ARGONAUT INSURANCE COMPANY, Petitioner, v. Debbie BAKER, individually and as next friend of Anthony Baker, an incapacitated person, and as next friend of M.B., a minor, and Leighla Baker, and Rockey Baker, Respondents.

No. 01-0287.

Supreme Court of Texas.

Argued on March 20, 2002.

Decided June 20, 2002.

Scott A. Whisler, James W. Grau, Grau Ashley & Koen PC, Dallas, for Petitioner.

Jeffrey S. Levinger, Carrington Coleman Sloman & Blumenthal, Windle Turley, Thomas B. Cowart, Law Offices of Windle Turley, Dallas, for Respondent.

Justice RODRIGUEZ delivered the opinion of the Court, in which Chief Justice PHILLIPS, Justice HECHT, Justice ENOCH, Justice OWEN, Justice BAKER, and Justice JEFFERSON join.

In 1989, the Texas Legislature required every workers' compensation carrier to offer optional deductible plans to allow policyholders to "self-insure" for the deductible amount. TEX. INS.CODE art. 5.55C(a). Under such a policy, the carrier must make all payments for benefits to an injured employee, including those payable from the deductible amount. Id. art. 5.55C(d), (e). When a third-party tortfeasor causes the employee's injuries, the carrier is subrogated to the injured employee's rights against the tortfeasor, and the net amount recovered in a third-party action shall be used to reimburse the carrier for benefits that have been paid. TEX. LAB.CODE 417.001, 417.002. The issue presented is whether allowing the carrier to be reimbursed for benefits paid from the deductible violates Insurance Code article 5.55C section (f), which provides that an employee "may not be required to pay any of the deductible amount." TEX. INS. CODE art. 5.55C(f). The court of appeals held that it does. 36 S.W.3d 587. Because we hold that it does not, we reverse the court of appeals' judgment in part and remand to the trial court for further proceedings consistent with this opinion.

I. Facts

Anthony Baker, an employee of Flowers Construction Company, was injured in a collision with a truck driven by an employee of Rocha Trucking. Because he was injured in the course and scope of his employment, Baker filed a claim for workers' compensation benefits with Argonaut Insurance Company, Flowers' workers' compensation insurance carrier. At the time, Flowers had a deductible plan that provided for Flowers to self-insure the first $250,000 of loss arising from each work-related injury suffered by its employees. Under the policy, Argonaut would first apply any recovery from a liable third party to benefit payments made by Argonaut in excess of the $250,000 deductible, and the remainder of any recovery would be applied to reduce the deductible amount Flowers owed.

Insurance Code article 5.55C governs optional deductible plans such as the one Flowers purchased. Flowers' deductible plan provided for Argonaut to pay the full amount of each covered claim submitted by an employee, including any portion payable from Flowers' deductible, as mandated by article 5.55C: "A deductible policy must provide that the [carrier] will make all payments for benefits that are payable from the deductible amount and that reimbursement by the policyholder shall be made periodically, rather than at the time claim costs are incurred." TEX. INS.CODE art. 5.55C(d). Argonaut paid a total of $352,596.13 in workers' compensation benefits to and on behalf of Baker, including the $250,000 paid from the deductible.

Baker's wife sued Rocha Trucking and the truck driver on Baker's behalf for damages arising from the accident. Soon after, Argonaut intervened to assert its subrogation right, under the Labor Code, to recover from the defendants the $352,596.13 in benefits it had paid. The Bakers disputed Argonaut's entitlement to reimbursement for the $250,000 in benefits paid from Baker's deductible, arguing that it was forbidden by article 5.55C(f)'s mandate that an injured employee "may not be required to pay any of the deductible amount." Id. art. 5.55C(f). Rocha Trucking and its driver ultimately agreed to pay $882,000 to settle all claims asserted against them in the lawsuit, including Argonaut's claim as Baker's subrogee. Under the settlement, $529,403.87 was paid to the Bakers and the remaining $352,596.13 was submitted to the Bakers' counsel to be held in trust pending resolution of the Bakers' challenge to Argonaut's reimbursement claim for the $250,000.

Argonaut moved the trial court for an order to distribute its workers' compensation lien on the $352,596.13. The parties then filed cross motions for summary judgment, each asserting their entitlement to the $250,000 in dispute. After a hearing, the trial court granted Argonaut's motions, denied the Bakers' motion for summary judgment, and awarded Argonaut the full 5352,596.13, less attorneys' fees and expenses awarded to the Bakers' counsel for their role in achieving the settlement. The court of appeals modified the trial court's judgment and reduced Argonaut's recovery by $250,000. The court of appeals reversed the remainder of the trial court's judgment, which awarded the Bakers' counsel attorney's fees and expenses incurred in connection with the recovery of the settlement, and remanded to the trial court for further proceedings. Argonaut filed this petition for review asking us to reinstate the trial court's judgment awarding it full reimbursement. No one petitioned this Court for review of the court of appeals' judgment remanding the issues of attorney's fees and expenses to the trial court.

II. Analysis

When both parties move for summary judgment and one motion is granted and one denied, the appellate court should determine all questions presented and render the judgment that the trial court should have rendered. City of Garland v. Dallas Morning News, 22 S.W.3d 351, 356 (Tex.2000). Here, both parties rely on statutory provisions to support their entitlement to summary judgment. In general, matters of statutory construction are questions of law. Id. at 357.

A.

Argonaut relies on sections 417.001 and 417.002 of the Labor Code for its right to reimbursement for the full 8352,596.13. Those sections provide that "[i]f a benefit is claimed by an injured employee or the legal beneficiary of the employee, the insurance carrier is subrogated to the rights of the injured employee" and "[t]he net amount recovered by [an employee] in a third-party action shall be used to reimburse the insurance carrier for benefits, including medical benefits, that have been paid for the compensable injury." TEX. LAB.CODE §§ 417.001, 417.002. Thus, according to Argonaut, because it paid $352,596.13 in benefits for the compensable injury, section 417.002 requires reimbursement from the settlement funds for the full $352,596.13 paid.

On the other hand, the Bakers contend that allowing Argonaut to recover the $250,000 from the settlement funds effectively passes the cost of the deductible from the employer to the employee, a result article 5.55C prohibits. Article 5.55C, which governs optional deductible plans, provides that employers must reimburse the insurance carrier periodically to cover benefit payments that are payable from the deductible amount and expressly forbids the employee from having to pay the deductible. TEX. INS.CODE art. 5.55C(d), (f). Thus, the Bakers argue, an insurance carrier that has paid benefits to an injured employee may obtain reimbursement of any amounts in excess of the deductible from the employee's recovery, but must then look to the employer for reimbursement of the deductible amount under those provisions. Otherwise, they contend, employers will receive a statutorily forbidden windfall by being allowed to pass on to their employees the cost of the deductible. The court of appeals agreed with the Bakers, concluding that article 5.55C's prohibition on the employee being made to pay the deductible, coupled with its requirement that the employer reimburse the carrier for benefits paid to the extent of the deductible amount, precludes Argonaut from obtaining reimbursement from the settlement funds for the $250,000 paid from the deductible.

B.

Because this case turns on the construction of several statutory provisions, we start with the provisions themselves. We construe a statute, "first, by looking to the plain and common meaning of the statute's words." Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 865 (Tex.1999). Under article 5.55C section (e), a carrier offering a deductible plan is statutorily obligated to "service all claims that arise during the policy period, including those claims payable, in whole or in part, from the deductible amount." TEX. INS.CODE art. 5.55C(e). Likewise, section (d) provides that the carrier must "make all payments for benefits that are payable from the deductible." Id. art. 5.55C(d). Thus, benefits payable from the deductible are included in the amount of workers' compensation benefits paid by the carrier to or on behalf of the injured employee. Further, section 417.002 of the Labor Code plainly states that the net amount recovered by a claimant in a third-party action shall be used to reimburse the insurance carrier "for benefits ... that have been paid for the compensable injury." TEX. LAB.CODE § 417.002 (emphasis added). Section 417.002 does not limit the carrier's right to reimbursement to those payments made in excess of the deductible amount. Thus, taken together, these provisions establish the carrier's right to reimbursement to the total amount of benefits it has paid, including those benefits payable from the deductible.

The Bakers contend, however, that allowing the full reimbursement required by section 417.002 conflicts with article 5.55C's mandate that the employee may not be required to pay any part of the deductible. They further argue that their construction, which limits the carrier's recovery to benefits paid in excess of the deductible, effectively harmonizes article 5.55C with section 417.002. To the contrary,...