Pickett v. Texas Mutual Insurance Co., 03-04-00374-CV.

• Decision Date: 26 July 2007
• Docket Number: No. 03-04-00374-CV.,03-04-00374-CV.
• Citation: 239 S.W.3d 826
• Parties: Mark PICKETT and Barbara Pickett, Appellants, v. TEXAS MUTUAL INSURANCE CO., f/k/a Texas Workers' Compensation Insurance Fund, Appellee.
• Court: Texas Court of Appeals

239 S.W.3d 826

Mark PICKETT and Barbara Pickett, Appellants, v. TEXAS MUTUAL INSURANCE CO., f/k/a Texas Workers' Compensation Insurance Fund, Appellee.

No. 03-04-00374-CV.

Court of Appeals of Texas, Austin.

July 26, 2007.

Cynthia A. Leiferman, Law Offices of Cynthia A. Leiferman, P.C., Austin, for appellant.

David P. Boyce, Wright & Greenhill, P.C., P.M. Schenkkan, Graves, Dougherty, Hearon & Moody, P.C., Mary Barrow Nichols, Austin, for appellee.

Before Justices PURYEAR, WALDROP and HENSON.

OPINION

G. ALAN WALDROP, Justice.

This appeal concerns the requirement that a party seeking damages for a workers' compensation insurance carrier's alleged delay or denial of medical benefits in bad faith must exhaust administrative remedies at the Texas Workers' Compensation Commission before filing suit. See American Motorists Ins. Co. v. Fodge, 63 S.W.3d 801, 804-05 (Tex.2001). Appellants Mark Pickett and Barbara Pickett sued Texas Mutual Insurance Company for allegedly delaying or denying medical benefits to Barbara Pickett in bad faith. The trial court dismissed most of the Picketts' claims for want of jurisdiction for failure to exhaust their administrative remedies at the Commission and granted a take-nothing summary judgment against the Picketts on their claims arising from three medical disputes for which the administrative remedies had been exhausted. We affirm.

In December 1995, Barbara Pickett suffered a back injury while performing her job duties for Molly Maid, a home cleaning service. She claims that her back injury resulted in depression and chronic pain in her neck, arms, lower back, and legs. Since 1995, Ms. Pickett has been repeatedly hospitalized for attempted suicide and self-mutilation. She contends that her work-related injury aggravated preexisting psychological conditions.

Texas Mutual is the workers' compensation insurance carrier for Molly Maid. It has paid income and disability benefits to Ms. Pickett for her work-related injury as well as hundreds of thousands of dollars for her healthcare. Beginning in 1997, Texas Mutual denied preauthorization for certain chronic pain management services related to Ms. Pickett's psychological disorders on the basis that those medical services were not related to her compensable injuries or were not reasonable and medically necessary. Under the Texas Workers' Compensation Act, Ms. Pickett was entitled to contest those denied preauthorization requests through an administrative dispute resolution procedure conducted by the Commission's Medical Review Division. See Tex. Lab.Code Ann. § 413.031 (West 2006). Ms. Pickett did not, however, submit any disputes concerning the denied preauthorization requests for administrative review at the Commission.

Beginning in 1999, Dr. Sanford Kiser, one of Ms. Pickett's healthcare providers, submitted several billing disputes to the Commission for administrative review. These disputes concerned medical services that Ms. Pickett had already received and for which Texas Mutual had denied reimbursement to Dr. Kiser. The Picketts were not involved in or parties to the billing disputes between Dr. Kiser and Texas Mutual. As a result of the billing disputes, Dr. Kiser obtained three final orders — two from the Commission and one from the State Office of Administrative Hearings — directing Texas Mutual to reimburse him.¹

In October 1999, Texas Mutual and Ms. Pickett entered into a Benefit Dispute Agreement. The purpose of the Agreement was to determine which of Ms. Pickett's psychological disorders were causally related to her compensable back injury. Texas Mutual and Ms. Pickett agreed that her diagnosis of major depressive disorder and pain disorder were causally related to the compensable back injury, but that her diagnosis of post-traumatic stress disorder, mixed personality disorder, and dissociative disorder were not related to the compensable back injury. The Agreement did not address or determine what medical treatments were related to Ms. Pickett's compensable psychological conditions, what treatments would be medically necessary and reasonable for those conditions, or what fees should be paid under the Commission's rules for treating those conditions. Therefore, Texas Mutual remained responsible for reviewing all of Ms. Pickett's submitted medical bills and preauthorization requests to determine whether a medical treatment related to her compensable injuries or her non-compensable injuries. The Agreement did not relieve Ms. Pickett or her healthcare providers of their obligations to exhaust administrative remedies regarding any disputes over specific medical benefits.

Two months after entering into the Agreement, the Picketts sued Texas Mutual asserting violations of the Texas Insurance Code and the Deceptive Trade Practices Act, breach of fiduciary duty and duty of good faith and fair dealing, intentional infliction of emotional distress, negligence, and negligent misrepresentation. They alleged that Texas Mutual wrongfully delayed or denied preauthorization for certain medical services and prescriptions related to Ms. Pickett's chronic pain condition, causing physical and psychological injury to Ms. Pickett beyond the extent of her work-related injury.²

In 2001, the Texas Supreme Court decided American Motorists Insurance Co. v. Fodge, which held that a trial court does not have subject matter jurisdiction over bad faith claims arising from allegedly delayed or denied workers' compensation benefits unless and until the worker obtains a timely, final administrative decision from the Texas Workers' Compensation Commission that the worker is entitled to the medical benefits in dispute. 63 S.W.3d at 804-05. Although Texas Mutual filed a motion to dismiss before Fodge was decided, the suit was abated by agreement of the parties until the issuance of that opinion. After Fodge was decided, the trial court held a hearing and initially denied the motion. Texas Mutual then filed a motion for reconsideration, a motion for partial summary judgment, a no evidence motion for summary judgment, and a traditional motion for summary judgment. The trial court granted the motion to reconsider, the motion to dismiss, and the motion for summary judgment. Because the Picketts did not obtain administrative orders from the Commission that Ms. Pickett was entitled to any of the medical benefits they claim were improperly delayed or denied, the trial court dismissed most of the Picketts' claims for want of jurisdiction. The trial court also granted a take-nothing summary judgment against the Picketts on their claims arising from the only final administrative orders in the record — the three orders directing Texas Mutual to reimburse Dr. Kiser for medical services that Ms. Pickett had already received. The court entered findings of fact and conclusions of law in support of the order of dismissal.

On appeal, the Picketts assert that (1) the application of the Fodge opinion to their case is unconstitutional; (2) their tort and statutory claims seeking damages other than the payment of workers' compensation benefits do not require administrative exhaustion; (3) claims subject to the Benefit Dispute Agreement do not require administrative exhaustion; (4) Texas Mutual waived the requirement that the Picketts exhaust their administrative remedies or, alternatively, that they exhausted their administrative remedies; (5) the futility exception to the exhaustion requirement applies; (6) the trial court erred in admitting certain evidence; (7) summary judgment is improper on claims over which the trial court had jurisdiction; and (8) the trial court's summary judgment is not a final judgment.

The Constitutional Application of Fodge

The Picketts assert numerous violations of their constitutional rights from the trial court's application of the Fodge opinion to their claims. First, they contend that the Fodge opinion established a new rule of law and, as such, cannot be applied retroactively to their claims arising before the issuance of that opinion.

Prior to the issuance of Fodge, it was well established that the Texas Workers' Compensation Act vested the power to award compensation benefits solely in the Commission, subject to judicial review. Saenz v. Fidelity & Guar. Ins. Underwriters, 925 S.W.2d 607, 612 (Tex.1996) (citing Brannon v. Pacific Employers Ins. Co., 148 Tex. 289, 224 S.W.2d 466, 468 (Tex. 1949); Traders & Gen. Ins. Co. v. Bailey, 127 Tex. 322, 94 S.W.2d 134, 135 (Tex. 1936); Commercial Casualty Ins. Co. v. Hilton, 126 Tex. 497, 87 S.W.2d 1081, 1083 (Tex.1935)). In Saenz, the Texas Supreme Court stated that "[a]llowing courts to award damages for wrongful deprivation of benefits would circumvent the Commission's jurisdiction." 925 S.W.2d at 612. Relying on Saenz, the Fodge court held that "just as a court cannot award compensation benefits, except on appeal from a Commission ruling, neither can it award damages for a denial in payment of compensation benefits without a determination by the Commission that such benefits were due." 63 S.W.3d at 804. Thus, the Fodge opinion interpreted existing law concerning exhaustion of administrative remedies in the workers' compensation context and did not, as the Picketts contend, establish a new rule of law.

Additionally, there are no constitutional prohibitions against applying the Fodge opinion to the Picketts' claims that arose prior to the issuance of that opinion in 2001. Instead, the general rule is that decisions of the supreme court apply retrospectively. Bowen v. Aetna Cas. & Sur. Co., 837 S.W.2d 99, 100 (Tex.1992); Elbaor v. Smith, 845 S.W.2d 240, 250 (Tex.1992). The decision of whether a supreme court case applies only prospectively lies within the discretion of the supreme court. See Lohec v. Galveston County Comm'rs Court, 841 S.W.2d 361, 366 (Tex.1992). In Lohec, the supreme court stated:

Our decisions operate retroactively unless this court exercises its discretion to...