In re Liberty Mut. Fire Ins. Co.

• Decision Date: 28 August 2009
• Docket Number: No. 08-0742.,08-0742.
• Citation: 295 S.W.3d 327
• Parties: In re LIBERTY MUTUAL FIRE INSURANCE COMPANY, Relator.
• Court: Texas Supreme Court

295 S.W.3d 327

In re LIBERTY MUTUAL FIRE INSURANCE COMPANY, Relator.

No. 08-0742.

Supreme Court of Texas.

August 28, 2009.

David L. Plaut, Catherine L. Hanna, Jeffrey C. Glass, Hanna & Plaut, LLP, Austin, for Relator.

Daniel F. Horne, Stone & Home, L.L.P., Corpus Christi, for Real Party in Interest.

PER CURIAM.

Raymond Nickelson seeks bad-faith damages against his workers' compensation carrier, Liberty Mutual Fire Insurance Company, for denying preauthorization of medical treatment. But he only alleges the carrier turned down office visits (for which preauthorization was not required) and possible back surgery (for which preauthorization was not sought). By demanding preauthorization when it was not required and failing to request it when it was, Nickelson avoided all the administrative remedies that governed his claims. As his bad-faith suit could not be brought before first exhausting these administrative remedies, the courts below erred in denying Liberty's plea to the jurisdiction.

Nickelson alleged total and permanent disability from neck and back injuries he received when he jumped off a four-foot platform on June 4, 2003. After failing to timely dispute compensability, Liberty paid temporary income benefits for seven months and medical care that included thrice-weekly chiropractic treatments. Liberty stopped paying temporary income benefits in January 2004 when a designated doctor found Nickelson had reached maximum medical improvement with an impairment rating of zero percent. See TEX. LAB.CODE §§ 408.0041, .102 Nickelson sought additional temporary income benefits through two benefit review conferences, a contested case hearing, an appeal to an appeals panel, and finally an appeal in Nueces County district court. At about the same time he filed suit, he phoned an adjustor who allegedly said Liberty was "not required to pay any more medical visits while my impairment rating was being contested." He also asserted that he "continued to try to make appointments with my doctor hoping that [Liberty] would not cut me off and worrying that I wouldn't be seen by the doctors and that I wouldn't get the neck surgery or back surgery I needed when the time came."

A year later, the parties settled all claims except a claim for bad-faith denial of access to medical care. Because medical care had not been raised in the previous administrative proceedings (which had addressed only income benefits), Liberty filed a plea to the jurisdiction seeking dismissal for failure to exhaust them. The trial court and court of appeals denied the plea. See 295 S.W.3d 344.

The Workers' Compensation Act vests the Workers' Compensation Division with exclusive jurisdiction to determine a claimant's entitlement to medical benefits. See TEX. LAB.CODE § 413.031; Am. Motorists Ins. Co. v. Fodge, 63 S.W.3d 801, 803-04 (Tex.2001). As Nickelson's bad-faith claim depends upon whether he was entitled to further medical care, that issue must first be addressed administratively. Fodge, 63 S.W.3d at 804. As it was not, the trial court should have granted Liberty's plea to the jurisdiction and dismissed the suit. See id. at 805. Its failure to do so is correctable by mandamus to prevent a disruption of the orderly processes of government. In re Sw. Bell Tel. Co., 235 S.W.3d 619, 624 (Tex.2007); In re Entergy Corp., 142 S.W.3d 316, 321 (Tex.2004).

Nickelson opposes dismissal on three grounds. First, he points to a provision in the parties' settlement that he "remains entitled to medical benefits for the compensable injury in accordance with Section 408.021." The referenced section requires carriers to pay for treatment "reasonably required" for compensable injuries, a duty that cannot be cut off by settlement. TEX. LAB.CODE § 408.021(a), (d). But while Nickelson (as all other workers) remained entitled to medical care, disputes about whether further care was reasonably required had to be pursued administratively; the settlement said nothing about dispensing with that.

Second, Nickelson argues exhaustion was not required of his claims because there were no administrative remedies to exhaust, relying on Gregson v. Zurich American Insurance Co., 322 F.3d 883, 887 (5th Cir.2003). In Gregson, the carrier preauthorized back surgery but then refused payment for an...