Izaguirre v. Texas Employers' Ins. Ass'n

• Decision Date: 31 March 1988
• Docket Number: No. 13-86-547-CV,13-86-547-CV
• Parties: Juanita O. IZAGUIRRE, Servando Solis, and Raul Guerrero, Appellants, v. TEXAS EMPLOYERS' INSURANCE ASSOCIATION, Appellee.
• Court: Texas Court of Appeals

Page 550

749 S.W.2d 550

Juanita O. IZAGUIRRE, Servando Solis, and Raul Guerrero, Appellants, v. TEXAS EMPLOYERS' INSURANCE ASSOCIATION, Appellee.

No. 13-86-547-CV.

Court of Appeals of Texas,

Corpus Christi.

March 31, 1988.

Rehearing Denied April 28, 1988.

Ray R. Marchan, Law Offices of Warren L. Eddington, Brownsville, for appellants.

William J. McCarthy, Roger W. Hughes, Adams, Graham, Jenkins, Graham & Hamby, Harlingen, for appellee.

Before SEERDEN, UTTER and DORSEY, JJ.

OPINION

SEERDEN, Justice.

Appellants, plaintiffs below, contest a summary judgment for appellee in their suit claiming injuries from intentional, bad faith denial and delay of workers' compensation payments. The workers' compensation claims had been disposed of prior to this suit. By cross-points, appellee contends that the court should have granted its Plea to Abate and Motion to Dismiss, which the the trial court denied before appellee moved for summary judgment. We affirm the summary judgment against Solis and Guerrero and reverse and remand Izaguirre's cause for trial.

This Court has already decided an appeal from an injunction in the same case in Cause No. 13-85-509-CV. An appellate court may take judicial notice of its judgments and records in the same or related cases. Buckner Orphans Home v. Berry, 332 S.W.2d 771, 775 (Tex.Civ.App.--Dallas 1960, writ ref'd n.r.e.); see also Allright, Inc. v. Guy, 696 S.W.2d 603, 605 (Tex.App.--Houston [14th Dist.] 1985, no writ); Rosenthal v. Groves, 387 S.W.2d 920, 921 (Tex.Civ.App.--Houston 1965, no writ). We will therefore consider the materials on file in the prior appeal when relevant to the issues the parties now raise.

By their original petition, appellants recited that each had been injured on the job, and that appellee intentionally, willfully, and fraudulently denied benefits to avoid having to pay the full benefits due. Appellants claim damages as a result of appellee's actions for emotional distress, reduced credit standing, and aggravation of their physical injuries, as well as punitive damages.

We will first consider appellee's Cross-Point No. One, which contends that the trial court erred in denying the plea to abate and motion to dismiss. Appellee's position is that the workers' compensation statute, Tex.Rev.Civ.Stat.Ann. art. 8306 et seq. (Vernon 1967 & Supp.1988), provides the exclusive remedy for all claims between a claimant and the insurer, and thus, all claims of any sort between the claimant and the insurer must first be brought to the Industrial Accident Board (IAB). Based on this premise, it sought a dismissal for failure to exhaust administrative remedies, because appellants originally brought their bad faith claim in the State District Court. All of the parties' briefs discuss whether Texas recognizes an independent action for breach of a duty of good faith and fair dealing by a workers' compensation claimant against the insurer, or whether the workers' compensation statute provides a claimant's sole remedies. We agree with the trial court that an independent, common-law action for bad faith exists and that therefore, the trial court was correct in not dismissing the claim for failure to first raise it with the IAB. See Aranda v. Insurance Co. of North America, 748 S.W.2d 210 (1988).

Appellee argues that the bad faith claim cannot be separated from the employment injury claim. To support this, it points out that the bad faith claim could have no existence but for the employment injury claim. It argues that the injuries for which the bad faith claimant seeks to be compensated are the same as those for which the claimant is compensated in the underlying employment injury claim: financial hardship (inability to pay bills), physical incapacity, and mental anguish. Thus, it contends a bad faith claimant is seeking a double recovery.

Appellee further argues that the workers' compensation statute was intended to be the exclusive remedy for workers' injuries arising from industrial accidents, and that the statute provides safeguards in the form of penalties the IAB may assess against abusive insurance carriers. Thus, it concludes, workers' compensation insurers do not enjoy unfettered control over claims processing. It further contends that any complaint of inadequacy of statutory controls and penalties should be addressed to the legislature.

Appellee additionally articulates the concern that recognizing a common-law bad faith claim would abrogate the role of the IAB and cause protracted lawsuits over every compensation claim. Finally, appellee suggests that computation of damages would be difficult or impossible in some circumstances.

The insurance carrier handling a workers' compensation claim owes the claimant a duty of good faith and fair dealing, and that breach of this duty, or "bad faith," is a tort independent of the underlying claim for employment injury and of the IAB's rules. Aranda at 214. A bad faith claim does not arise from the employment injury itself, but rather from separate acts during the processing of such a claim. To demonstrate the distinctness of the causes of action, we need only look to the elements of each. A workers' compensation claim alleges that the claimant suffered incapacity in the scope of employment as a result of an accidental injury or an occupational disease. See Houston Fire & Casualty Insurance Co. v. Dieter, 409 S.W.2d 838, 841 (Tex.1966); Texas Employers' Insurance Association v. Garza, 675 S.W.2d 245, 247 (Tex.App.--Corpus Christi 1984), writ ref'd n.r.e. per curiam, 687 S.W.2d 299 (1985); Texas Employers' Insurance Association v. Dryden, 612 S.W.2d 223, 224 (Tex.App.--Beaumont 1980, writ ref'd n.r.e.). A bad faith claim alleges that an insurer denied the underlying claim or delayed payment when it had no reasonable basis, or without determining whether it had a reasonable basis for the denial or delay. Arnold v. National County Mutual Fire Insurance Co., 725 S.W.2d 165, 167 (Tex.1987); see also Aranda at 212.

Moreover, the successful bad faith claimant does not receive a double recovery on the original claim. A bad faith recovery includes damages not for the original injury or disease and its resulting incapacity, but only for the damages resulting from the bad faith acts; not for the loss of earning capacity, but for the additional costs, economic hardship, or losses due to nonpayment of amounts owed; and not for the mental anguish of originally suffering the injury, but for being subjected to the bad faith acts. Additionally, upon proper proof, a bad faith claimant can recover punitive damages.

Difficulty in ascertaining damages does not prevent recovery. Vance v. My Apartment Steak House, 677 S.W.2d 480, 484 (Tex.1984).

Appellee argues that allowing a common law action for bad faith evades art. 8306 § 3 and improperly creates jurisdiction in the trial court to pass on workers' compensation benefits. We agree with appellee's analysis that workers' compensation provides compensation for the lost earning capacity and medical expenses due to the injury, but not for pain, suffering, or the injury itself. Texas Employers Insurance Association v. Clack, 134 Tex. 151, 132 S.W.2d 399, 401 (1939); Baker v. Westchester Fire Insurance Co., 385 S.W.2d 447, 449 (Tex.Civ.App.--Amarillo 1964, writ ref'd n.r.e.); Hotchkiss v. Texas Employers' Insurance Association, 479 S.W.2d 336, 339-40 (Tex.Civ.App.--Amarillo 1972, no writ). It avoids litigation of fault in return for limited, but easily ascertainable, damages. See Woolsey v. Panhandle Refining Co., 131 Tex. 449, 116 S.W.2d 675, 676 (1938); Leal v. United States Fire Insurance Co., 682 S.W.2d 591, 593 (Tex.App.--Austin 1984, writ ref'd n.r.e.); Hazelwood v. Mandrell Industries Co., 596 S.W.2d 204, 206 (Tex.Civ.App.--Houston [1st Dist.] 1980, writ ref'd n.r.e.). We agree that an employee accepting workers' compensation benefits may not bring a separate action for the same injury. Massey v. Armco Steel Co., 652 S.W.2d 932, 933 (Tex.1983); Gore v. Amoco Production Co., 616 S.W.2d 289, 290 (Tex.Civ.App.--Houston [1st Dist.] 1981, no writ). However, as discussed previously, bad faith is not an employment injury, but is a separate and distinct tort arising from the claims handling process.

In Massey, the Supreme Court decided the case on pleading defects and did not reach the question of the insurer's duty of good faith and fair dealing. There, the employee attempted to state a cause of action for conspiracy of the employer with the insurer to withhold workers' compensation benefits. However, the court stated that an employee may have both a workers' compensation claim and a claim at common law against the employer for an intentional tort. However, such claims are mutually exclusive, and the employer's intentional act must be separable from the compensation claim and must produce an independent injury. Massey, 652 S.W.2d at 933. Applying this reasoning, we conclude that the litigation of a workers' compensation claim under the Act does not preclude a worker from recovering from the insurer at common law for the insurer's separate intentional tort.

We have examined articles 8306, § 3 and § 3a, and find no bar to claims against the insurer outside of the workers' compensation statute for its separate tortious acts. See Aranda at 214. For example, the workers' compensation statute was not a bar to the assertion of a claim under the insurance code in Aetna Casualty and Surety Co. v. Marshall, 724 S.W.2d 770, 772 (Tex.1987).

Appellee complains that appellants allege it did not comply with the workers' compensation statute. As the beneficiary of the insurance coverage, and as one who has given up other rights in exchange for its protections, the worker may bring an action for a breach of the duty of good faith or for intentional misconduct in the processing of a claim. Aranda at 215.

We hold that the penalties provided for in article 8306, § 18a, which appellee enumerates, are not...