Continental Cas. Co. v. Downs

• Decision Date: 06 June 2002
• Docket Number: No. 00-1309.,00-1309.
• Citation: 81 S.W.3d 803
• Parties: CONTINENTAL CASUALTY COMPANY, Petitioner, v. Mary Ann DOWNS, Beneficiary of Raymond Downs, deceased, Respondent.
• Court: Texas Supreme Court

Page 803

81 S.W.3d 803

CONTINENTAL CASUALTY COMPANY, Petitioner, v. Mary Ann DOWNS, Beneficiary of Raymond Downs, deceased, Respondent.

No. 00-1309.

Supreme Court of Texas.

Argued October 24, 2001.

Decided June 6, 2002.

Rehearing Denied August 30, 2002.

David L. Brenner, Joe R. Anderson, Kristin Lee Gustayson, Burns Anderson Jury & Brenner, Austin, Timothy K. Singley, Thornton Summers Biechlin Dunham & Brown, San Antonio, for Petitioner.

Kenneth W. Howell, Law Office Of Miller & Henderson, San Antonio, for Respondent.

Justice HANKINSON delivered the opinion of the Court, in which Chief Justice PHILLIPS, Justice ENOCH, Justice BAKER, and Justice O'NEILL joined.

In this cause we interpret provisions of the Texas Workers' Compensation Act (the Act) governing when a workers' compensation carrier must notify a claimant that the carrier is refusing to pay benefits. See TEX. LAB.CODE §§ 409.021, 409.022. The district court granted summary judgment for the carrier on the basis that it had timely contested compensability even though it had not timely notified the claimant that it was refusing to pay benefits. The court of appeals reversed and rendered judgment for the claimant, and remanded the issue of attorney's fees. 32 S.W.3d 260. We conclude that under Texas Labor Code §§ 409.021 and 409.022, a carrier that fails to begin benefit payments as required by the Act or send a notice of refusal to pay within seven days after it receives written notice of injury has not met the statutory requisite to later contest compensability. We accordingly affirm the court of appeals' judgment.

Respondent Mary Ann Downs timely filed a claim for workers' compensation benefits after her husband's fatal heart attack. Petitioner Continental Casualty Company provided workers' compensation insurance to her husband's employer. Continental first notified Downs that it disputed the compensability of her claim forty-eight days after it received notice of the injury. The parties proceeded to a benefit-review conference and then a contested-case hearing at the Texas Workers' Compensation Commission. The hearing officer determined that Downs' husband's heart attack was not compensable and that Continental had timely contested compensability. An appeals panel affirmed that decision. Having exhausted her administrative remedies, Downs sought judicial review in the district court. The parties filed cross-motions for summary judgment, and the court granted summary judgment for Continental, affirming the Commission's decision. Downs appealed, complaining only of the determination that Continental had timely disputed compensability. The court of appeals reversed and rendered judgment in favor of Downs, and it remanded Downs' claim for attorney's fees to the district court. 32 S.W.3d at 264. It held that because Continental had not timely notified Downs of its refusal to pay benefits, it could not contest compensability. Id.

Continental petitioned this Court for review, contending that the court of appeals' interpretation of Labor Code §§ 409.021 and 409.022 deprives carriers of the statutory sixty-day deadline to contest compensability and imposes an additional penalty not reflected in the statutory scheme for failure to meet the seven-day pay-or-dispute deadline. It further argues that the court of appeals' interpretation is contrary to the Commission's interpretation and application of the statutes. Downs responds that the Commission's interpretation is at odds with the language of sections 409.021 and 409.022, and that to read those provisions as Continental proposes would defeat the Legislature's express intent that workers receive either prompt payment or notice of denial of compensation claims.

As we are called upon to interpret what the parties agree are the controlling provisions of the Labor Code, we begin by reviewing the relevant principles of statutory construction. The goal of statutory construction is to give effect to legislative intent. Kroger Co. v. Keng, 23 S.W.3d 347, 349 (Tex.2000); Texas Water Comm'n v. Brushy Creek Mun. Util. Dist., 917 S.W.2d 19, 21 (Tex.1996); Monsanto Co. v. Cornerstones Mun. Util. Dist., 865 S.W.2d 937, 939 (Tex.1993). Unless a statute is ambiguous, we discern that intent from the language of the statute itself. See Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 865 (Tex. 1999); RepublicBank Dallas v. Interkal, Inc., 691 S.W.2d 605, 607 (Tex.1985); see also TEX. GOV'T CODE § 311.011(a) ("Words and phrases shall be read in context and construed according to the rules of grammar and common usage."). Further, we consider a statute as a whole, not its provisions in isolation. Helena Chem. Co. v. Wilkins, 47 S.W.3d 486, 493 (Tex.2001); Fitzgerald, 996 S.W.2d at 866.

Labor Code chapter 409 sets out the procedures that employees, employers, and carriers must follow when an employee seeks workers' compensation benefits after suffering an injury on the job. TEX. LAB.CODE §§ 409.001-.044. Subchapter B, entitled "Payment of Benefits," specifies what a carrier must do, and when, after it receives written notice of an injury. Id. §§ 409.021-.024. Section 409.021(a) mandates that carriers must do one of two things within seven days after receiving written notice of injury-begin paying benefits as required by the Act or give written notice of refusal to pay benefits:

An insurance carrier shall initiate compensation under this subtitle promptly. Not later than the seventh day after the date on which an insurance carrier receives written notice of an injury, the insurance carrier shall:

(1) begin the payment of benefits as required by this subtitle; or

(2) notify the commission and the employee in writing of its refusal to pay

. . . .

Id. § 409.021(a). By directing that insurance carriers "shall" either begin payment as required by the Act or send notice of refusal, the Legislature imposed a duty on carriers to take one of those actions within seven days. See TEX. GOV'T CODE § 311.016(2) (generally, use of the word "`[s]hall' imposes a duty"); see also Albertson's, Inc. v. Sinclair, 984 S.W.2d 958, 961 (Tex.1999) ("We generally construe the word `shall' as mandatory, unless legislative intent suggests otherwise.").

Section 409.022 expands on what the notice of refusal must contain and what effect the notice has on further proceedings. TEX. LAB.CODE § 409.022. Section 409.022(a) explains that a carrier's "notice of refusal to pay benefits under Section 409.021 must specify the grounds for the refusal." Id. § 409.022(a). The next subsection explains that except for newly discovered evidence, a carrier is bound by the grounds for refusal it specifies in the notice of refusal: "The grounds for the refusal specified in the notice constitute the only basis for the insurance carrier's defense on the issue of compensability in a subsequent proceeding, unless the defense is based on newly discovered evidence that could not reasonably have been discovered at an earlier date." Id. § 409.022(b). Thus, if a carrier timely sends its notice of refusal it may continue to investigate, but absent newly discovered evidence, has limited its defenses on the issue of compensability to the grounds for refusal specified in the notice. Id.

Giving effect to all the language in both sections 409.021 and 409.022, and keeping in mind the legislative goal of providing employees with either prompt payment or notice of denial of benefits, the following propositions are clear: (1) under section 409.021(a), a carrier must initiate benefits as required by the Act or file a notice of refusal; (2) under section 409.021(c), a carrier who initiates benefits may take up to sixty days to investigate or deny compensability for any valid reason; and (3) under section 409.022(b), a carrier who files a notice of refusal may investigate or deny compensability, but is limited to the grounds specified in the notice as bases for contesting compensability, except for newly discovered evidence. Therefore, a carrier that has neither initiated benefits nor filed a notice of refusal has not complied with the statutory requisite, and has failed to trigger the sixty-day period to investigate or deny compensability.

It is also clear that by mandating that carriers either initiate benefits as required by the Act or send a notice of refusal within the short seven-day deadline, the Legislature intended to provide employees with a prompt response to their benefit claims and to streamline the process to avoid early attorney involvement. See 1 MONTFORD ET AL., A GUIDE TO TEXAS WORKERS' COMP REFORM 5-52 (1991) ("Section [409.021] significantly accelerates the `processing time' for carriers either to initiate benefit payments ... or to contest compensability. Promptness of the initial comp payment was considered an important reform objective since delays in initiating benefits under the prior law at times resulted in hardship upon the employee and a need ... for early attorney involvement."). The Legislature further sought to encourage carriers to initiate benefit payments by providing an unfettered basis to deny compensability for up to sixty days if benefits are initiated, but limiting a carrier who refuses to pay to the ground specified in a notice of refusal, unless the carrier discovers new evidence it could not reasonably have discovered earlier. See TEX. LAB.CODE § 409.022(b); see also id. §§ 409.022(c) (stating that carrier commits administrative violation if it "does not have reasonable grounds for a refusal to pay benefits"), 415.002(18) (stating that carrier commits administrative violation if it "controverts a claim if the evidence clearly indicates liability"). Thus, interpreting the legislative scheme to require carriers to comply with the seven-day deadline to trigger the sixty-day period to investigate or deny compensability gives meaning to all the provisions of both sections 409.021 and 409.022, and strikes a balance between the...