Gregson v. Zurich American Ins. Co.

• Decision Date: 07 March 2003
• Docket Number: No. 02-20169.,02-20169.
• Citation: 322 F.3d 883
• Parties: David GREGSON, Cathy Gregson, Plaintiffs-Appellants, v. ZURICH AMERICAN INSURANCE COMPANY, et al., Defendants, Zurich American Insurance Company; Zurich American Insurance Company of Illinois; Eckerd Corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

322 F.3d 883

David GREGSON, Cathy Gregson, Plaintiffs-Appellants, v. ZURICH AMERICAN INSURANCE COMPANY, et al., Defendants, Zurich American Insurance Company; Zurich American Insurance Company of Illinois; Eckerd Corporation, Defendants-Appellees.

No. 02-20169.

United States Court of Appeals, Fifth Circuit.

March 7, 2003.

Jeffrey H. Marsh (argued), Donald Scott Stephens, Mattingly & Marsh, Houston, TX, for Plaintiffs-Appellants.

Carol Patricia Keough (argued), Coats, Rose, Yale, Ryman & Lee, Houston, TX, for Defendants-Appellees.

Appeal from the United States District Court for the Southern District of Texas.

Before KING, Chief Judge, and DeMOSS and CLEMENT, Circuit Judges.

CLEMENT, Circuit Judge:

Appellants, David and Cathy Gregson ("Gregsons") appeal the district court's dismissal of their complaint for failure to exhaust administrative remedies under Federal Rules of Civil Procedure Rule 12(b)(6). For the following reasons, we reverse and remand for further proceedings.

I. FACTS AND PROCEEDINGS

David Gregson ("Gregson") sustained an injury while at work, which required back surgery. Following surgery, Gregson's physician prescribed him an antibiotic called Levaquin to prevent infection. Gregson attempted to have the prescription filled at Eckerd Pharmacy on a Friday, but Zurich American Insurance Company ("Zurich") denied coverage for the medication. Over the weekend, Gregson repeatedly tried to contact Zurich, but to no avail. Gregson made a second attempt at filling the prescription on the following Monday, but was unsuccessful. Gregson then discovered that he was suffering from a staph infection, which required hospitalization and two additional surgeries. While hospitalized, doctors administered Levaquin to Gregson.

Gregson alleges that the subsequent surgeries were the direct result of Zurich's failure to approve and cover the Levaquin prescribed by his physician. Gregson filed suit against Zurich seeking to recover damages for both contractual and extra-contractual breaches based on Zurich's denial of the medication.

II. DISCUSSION

The district court based its decision to grant Zurich's motion to dismiss on Gregson's failure to exhaust his administrative remedies through the Texas Workers' Compensation Commission ("TWCC"). We review de novo the grant of a 12(b)(6) motion to dismiss. "A motion to dismiss under rule 12(b)(6) `is viewed with disfavor and is rarely granted.'" Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir.2000) (quoting Kaiser Aluminum & Chem. Sales v. Avondale Shipyards, 677 F.2d 1045, 1050 (5th Cir.1982)). This Court construes the complaint liberally in favor of the plaintiff, and takes all facts pleaded in the complaint as true. Campbell v. Wells Fargo Bank, 781 F.2d 440, 442 (5th Cir.1986). This strict standard of review may be summarized as follows: "[t]he question therefore is whether in the light most favorable to the plaintiff and with every doubt resolved on his behalf, the complaint states any valid claim for relief." 5 CHARLES A. WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1357, at 601 (1969).

The TWCC is vested with the exclusive authority to award compensation benefits by the Workers' Compensation Act subject to judicial review. See Saenz v. Fid. & Guar. Ins. Underwriters, 925 S.W.2d 607, 612 (Tex.1996). However, if one alleges a claim arising under a body of law other than the Act, there is no duty to present the claim to the TWCC first. Cigna Ins. Co. of Texas v. Killion, 50 S.W.3d 17, 20 (Tex.App.2001).

On appeal, Gregson contends that the district court erred in ruling that he had to exhaust his administrative remedies with the TWCC before he could pursue a civil action against Zurich. Based on TWCC Advisory Opinion 98-06, Gregson argues that Zurich had no right to dispute treatment for which preauthorization was not required. Gregson further argues that there was no administrative remedy available to him because Medical Dispute Resolution is only available for disputes over the reimbursement of the expense of medical treatment — not disputes as to whether or not the treatment should have been provided. Moreover, Gregson submits that the TWCC does not have jurisdiction over his claim because it is extra-contractual in nature. Zurich, however, claims that before Gregson could bring his extra-contractual claims, he had to receive a determination from the TWCC that he was entitled to the prescription medication pursuant to the Workers' Compensation Act, and that such administrative review was available.

Zurich submits that this Court's decision is constrained by the Texas Supreme Court's holding in American Motorists Ins. Co. v. Fodge, 63 S.W.3d 801, 804 (Tex. 2001).¹ In Fodge, the question was whether "a compensation claimant can prosecute a lawsuit against a carrier to recover benefits and damages resulting from a denial of benefits without a prior determination by the [TWCC] that benefits are due." Id. at 801. Fodge claimed benefits from American Motorists Insurance Company ("American") for a back injury she sustained at work. American denied the claim for not being work related and for failing to timely notify her employer. A benefit review officer determined that Fodge suffered a compensable injury which she brought to the attention of her employer in a timely manner. Id. at 802. Fodge never alleged that American denied her medical benefits. Neither party appealed the hearing, but Fodge subsequently sued American for allegedly underpaying and delaying payment of temporary income benefits, and denying and delaying payment for medical treatment and prescribed medication. Id. Fodge sought damages on several grounds, including damages for "mental anguish resulting from her inability to obtain medical care." Id. at 803. The Texas Supreme Court held that Fodge's failure to obtain a final ruling from the TWCC on whether or not she was entitled to medical benefits was dispositive of her extra-contractual claims against the defendant insurance carrier.

While some of the facts are similar, this Court is not limited by Fodge because Zurich had already agreed to provide coverage for Gregson's back surgery and all other reasonable and necessary medical benefits at the time the dispute arose over the medication. Consequently, the precise question presented here is whether an employee must initiate and exhaust administrative procedures with the TWCC when a carrier, who has agreed to provide all necessary and reasonable medical coverage, denies coverage of a medical benefit incident to the approved medical treatment.

Gregson contends that the answer to this narrower question lies in TWCC Advisory 98-06 ("the Advisory"). While this Court is not bound to follow a TWCC Advisory, it should accord such an advisory opinion some deference so long as it is reasonable and it harmonizes with the plain language of the statute, its origin, and its purpose. See E.E.O.C. v. Exxon Corp., 202 F.3d 755, 758 (5th Cir.2000). Texas courts similarly accord weight to agency interpretations. See Gen. Elec. Credit Corp. v. Smail, 584 S.W.2d 690, 695 (Tex.1979).

The Advisory at issue concerns the coverage of medical benefits that do not require preauthorization under Texas Administrative Code § 134.600. Prescription medication is not included under § 134.600 as a medical benefit requiring preauthorization. See ...