Texas Mut. Ins. v. Sonic Systems Intern.
| Decision Date | 08 June 2006 |
| Docket Number | No. 14-05-00111-CV.,No. 14-05-00770-CV.,14-05-00111-CV.,14-05-00770-CV. |
| Citation | 214 S.W.3d 469 |
| Parties | TEXAS MUTUAL INSURANCE CO., f/k/a Texas Workers' Compensation Fund, Appellant, v. SONIC SYSTEMS INTERNATIONAL, INC., Appellee. In re Sonic Systems International, Relator. |
| Court | Texas Court of Appeals |
Charles W. Hurd, David Andrew Baay, Hannah DeMarco Sibiski, Rick Lee Oldenettel, Staton Michael Childers, Willard Tinsley, Houston, Boyce C. Cabaniss, Mark A. Keeney, Jeff R. Boggess, Austin, for appellants/respondents.
Lance P. Olinde, Jr., Houston, Robert W. Higgason, Spring, for appellee's/relator.
Panel consists of Justices FOWLER, EDELMAN and GUZMAN.
Two causes are before us, both stemming from a workers' compensation case in which a former employee of Sonic Systems International, Inc., a Texas corporation, was injured on the job while working in Alabama. Texas Mutual Insurance Co. ("TMI"), Sonic's workers' compensation carrier, denied coverage for the injury, and Sonic filed suit against TMI for breach of contract, breach of fiduciary duty, negligence and deceptive trade practices claims (the "contract claims"). Subsequently, Sonic also sought reimbursement under the Texas Workers' Compensation Act ("TWCA") for voluntary payments it made to the injured employee. In October 2003, Sonic's contract claims were abated pending a final resolution of the reimbursement claim.
After its reimbursement claim was denied under the TWCA, Sonic sought judicial review of that decision. The trial court rendered judgment in Sonic's favor, and TMI appeals the trial court's judgment (the "judicial review case") in Cause No. 14-05-00111-CV. Sonic's contract claims against TMI have remained abated since October 2003 and, in Cause No. 14-05-0770-CV, Sonic seeks a writ of mandamus ordering the trial court to lift abatement. We have consolidated the cases for purposes of this opinion.
The consolidated cases present the following issues: (1) whether Cochran's election to recover benefits under Alabama's workers' compensation laws bars Sonic's recovery as Cochran's subclaimant under the TWCA; and (2) whether the trial court acted appropriately by continuing to abate Sonic's contract claims pending a final determination of the reimbursement claim.
Because we conclude Sonic failed to establish as a matter of law that its claim for reimbursement under the TWCA, as a subclaimant, survived the employee's election to pursue and recover remedies under Alabama's workers' compensation laws, we reverse the trial court's judgment in Sonic's favor and render judgment affirming the decision of the appeals panel in Cause No. 14-05-00111-CV. Further, because we hold that the trial court's decision to continue abatement of Sonic's contract claims was improper, and Sonic lacks an adequate remedy by appeal should abatement continue, we conditionally grant Sonic's petition for writ of mandamus in Cause No. 14-05-00770-CV.
Gary Cochran, an Alabama resident, injured his back while working for Sonic in that state. Sonic informed TMI of Cochran's injury,1 but TMI denied coverage, claiming Cochran was an independent contractor and that he failed to meet the extraterritorial provisions of the TWCA. Sonic began making voluntary compensation payments to Cochran shortly after his injury.
In 1999, Sonic filed its contract claims against TMI in a Harris County court and also filed claims against Randy Croix and the Eddie Croix Insurance Agency, Inc. (the "Croix defendants"), the parties that sold TMI's policy to Sonic.2 In that same year, Cochran filed suit against Sonic in Alabama, under that state's workers' compensation laws. Cochran recovered judgment against Sonic on July 13, 2001. Several days later, on July 17, 2001, Sonic filed a claim with the Texas Workers' Compensation Commission ("TWCC") seeking reimbursement under section 409.009 of the Labor Code, for $78,023.89, the voluntary benefits it paid to Cochran prior to his receipt of the Alabama judgment.3 Following a hearing on Sonic's reimbursement claim, the hearing officer concluded that Cochran was Sonic's employee at the time of the accident and was entitled to benefits under the TWCA, but because he recovered benefits under Alabama's laws, he was barred by section 406.075 of the Texas Labor Code4 from recovering benefits and, as Cochran's subclaimant, Sonic's reimbursement claim was likewise barred.
Sonic appealed the hearing officer's decision regarding Cochran's election of remedies and its entitlement to reimbursement. On May 22, 2002, the appeals panel issued its decision, affirming the hearing officer's determinations and concluding as follows:
The hearing officer did not err in determining that the claimant elected to pursue a remedy and recover compensation under the workers' compensation laws of the State of Alabama. . . .
* * * *
The hearing officer did not err in determining that [Sonic] is not entitled to reimbursement for workers' compensation and medical payments from the carrier because he also found that no benefits were due under the laws of Texas. [Sonic's] request for reimbursement is essentially a subrogation claim to those benefits. Because [Cochran] is barred from recovery under the [TWCA], we conclude that [Sonic], likewise, is not entitled to recovery under the [TWCA] as a matter of law. A question of whether [Sonic] is entitled to reimbursement of Alabama benefits remains a question for another jurisdiction.
In their decision, the panel discussed primarily whether Cochran had in fact made an "election" to pursue his remedies in Alabama, noting the hearing officer did not credit Cochran's statement that he was compelled to pursue benefits under Alabama's laws rather than the TWCA, and concluded the hearing officer's determination was not so against the great weight and preponderance of the evidence.5 Sonic filed a lawsuit seeking judicial review of the panel's decision.
In 2001, after Sonic filed its reimbursement claim with the TWCC, Sonic's contract claims were abated pending a determination of the compensability of Cochran's injury. The abatement order was temporarily lifted in January 2003, and the cases were subsequently consolidated. Both parties then moved for summary judgment on the election of remedies issue in the consolidated cases. The trial court granted Sonic's motion, and in its final order,6 awarded Sonic $78,023.89 under section 409.009, reversed the appeals panel's decision on whether Cochran had made an election of remedies and on Sonic's entitlement to reimbursement, and denied TMI's summary judgment motion. TMI appeals the trial court's judgment.
On October 23, 2003, prior to Sonic's moving for summary judgment, the trial court granted TMI's7 request to again abate Sonic's contract claims. Sonic's contract claims have been abated since that date.8 The trial court's abatement orders are the subject of Sonic's mandamus petition.
In its appeal, TMI presents two issues for our review: (1) whether section 406.075 applies to bar Cochran's pursuit of remedies under the TWCA; and (2) if so, is Sonic, as Cochran's subclaimant, barred from seeking reimbursement under section 409.009. TEX. LAB.CODE ANN. § 409.009 (Vernon 2006).
In its mandamus petition, Sonic argues that continued abatement of its contract claims is an abuse of discretion because there is no authority to support abatement, and the orders are a violation of the Open Courts provision of the Texas Constitution. See TEX. CONST. Art. I, § 13. We begin with the appeal.
TMI argues the trial court erred in granting summary judgment to Sonic on the reimbursement claim because section 406.075 bars Cochran's recovery of benefits under the TWCA and, as Cochran's subclaimant, Sonic is likewise barred from recovering under that statute. In response Sonic contends that section 406.075 does not apply in this case because the compensation payments to Cochran were voluntary and were made prior to his receipt of the Alabama judgment. Sonic asserts it is entitled to recover the benefits from TMI because it satisfied the provisions of section 409.009.
Section 406.075(a) provides that an employee who elects to pursue his remedy under the workers' compensation laws of another jurisdiction, and who recovers benefits under those laws, may not recover under the TWCA. TEX. LAB.CODE ANN. § 406.075(a) (Vernon 2006). Under section 409.009 of the Labor Code, a person may file a claim with the TWCC as a subclaimant if that person has:
(1) provided compensation, including health care provided by a health care insurer, directly or indirectly, to or for an employee or legal beneficiary; and
(2) sought and been refused reimbursement from the insurance carrier.
Id. § 409.009.
In the trial court, Sonic argued in its summary judgment motion that the appeals panel erred because section 409.009 does not require a finding that benefits are due under the laws of Texas, and there was no election of remedies until Cochran received the Alabama judgment on July 13, 2001.9 Sonic claimed that Cochran was compelled to pursue his benefits in Alabama due to TMI's continued denial of his claim, and that section 406.075 had not been satisfied at the time payments were made because no remedy was obtained in Alabama until the judgment was entered.
TMI argued in its summary judgment motion that Sonic's claim for reimbursement under the TWCA was barred because Cochran's recovery was barred. TMI reasoned that, as Cochran's subclaimant, once Cochran recovered the Alabama judgment, Sonic was also barred from receiving benefits under the TWCA. Further, TMI asserted (1) the Alabama judgment expressly stated that both Cochran and Sonic were subject to Alabama's workers' compensation laws and therefore, adjudicated the issue as to which jurisdiction's...
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