Wolford v. American Home Assur. Co.

• Decision Date: 04 May 2006
• Docket Number: No. 01-05-00215-CV.,01-05-00215-CV.
• Citation: 263 S.W.3d 12
• Parties: Kenneth WOLFORD, Appellant, v. AMERICAN HOME ASSURANCE COMPANY, Appellee.
• Court: Texas Court of Appeals

263 S.W.3d 12

Kenneth WOLFORD, Appellant, v. AMERICAN HOME ASSURANCE COMPANY, Appellee.

No. 01-05-00215-CV.

Court of Appeals of Texas, Houston (1st Dist.).

May 4, 2006.

William J. Robertson, Houston, TX, for Appellant.

David J. Metzler, Cowles & Thompson, P.C., Dallas, TX, for Appellee.

Panel consists of Justices NUCHIA, KEYES, and HANKS.

OPINION

EVELYN V. KEYES, Justice.

This is a workers' compensation case. Appellant, Kenneth Wolford, appeals from an order granting summary judgment in favor of appellee, American Home Assurance Company ("AHAC"). In 2002, AHAC brought suit against Wolford to challenge a Texas Workers' Compensation Commission (TWCC) appeals panel's decision awarding Wolford certain worker's compensation benefits. In his answer, Wolford asserted counterclaims alleging that AHAC's suit breached the common law duty of good faith and fair dealing and that the suit itself was groundless and frivolous. AHAC non-suited its original action against Wolford and moved for traditional summary judgment on his counterclaims. The trial court granted AHAC's motion without specifying the grounds for its decision. In five issues on appeal, Wolford contends that the trial court erred in granting AHAC's motion for summary judgment because genuine issues of material exist regarding whether AHAC brought suit for the bad faith purpose of delaying benefit payments.

We affirm.

BACKGROUND

In May 2001, Wolford, while working at Wal-Mart, injured his back as he lifted a case of juice. AHAC, the workers' compensation carrier for Wal-Mart, received a report describing the injury on May 11, 2001. Wolford subsequently began physical therapy treatments for which AHAC agreed to pay. After three months of physical therapy, Wolford's treating physician determined that Wolford might be a candidate for back surgery and referred him to a specialist, Dr. Vivek Kushwaha. Dr. Kushwaha concluded that Wolford suffered from lower disc degeneration and herniation and devised the following treatment plan:

I am going send him for epidural steroid injections to try to help relieve his pain. I am going to send for authorizations for microdiskectomy just in case the injections don't work so that we can help relieve his leg pain. I think a fusion would be necessary to address his degenerative disc but I would not recommend that for him at this point. I will see him back after the injections.

Upon receiving Dr. Kushwaha's recommendation that spinal surgery ("fusion") would likely be necessary to treat Wolford, AHAC exercised its right to obtain a second medical opinion prior to approving payment for the surgery. See TEX. LAB. CODE ANN. § 408.026 (Vernon 1996). AHAC referred Wolford to Dr. Stephen Esses, a professor of clinical orthopedic surgery at Baylor College of Medicine. While his examination of Wolford detected some disc degeneration and protrusion, Dr. Esses concluded that he did not concur with Dr. Kushwaha's recommendation for surgery. Wolford subsequently sought the opinion of a third back specialist, Dr. Mark McDonnell, who agreed with Dr. Kushwaha's recommendation regarding the need for surgery.

With the three examining specialists offering conflicting opinions, AHAC sought a contested case hearing before the TWCC. See TEX. LAB.CODE ANN. § 410.151 (Vernon 1996). On April 23, 2002, a TWCC hearing officer found in Wolford's favor, concluding that the costs of the spinal surgery were reasonable and necessary and thus covered under AHAC's policy. AHAC appealed the decision to a TWCC appeals panel which upheld the hearing officer's decision. See TEX. LAB.CODE ANN. § 410.202 (Vernon Supp.2005).

Having exhausted its administrative appeals, AHAC filed suit against Wolford in order to obtain judicial review of the appeals panel's decision pursuant to section 410.251 of the Texas Labor Code. See TEX. LAB.CODE ANN. § 410.251 (Vernon 1996). In his answer to AHAC's suit, Wolford counterclaimed that the carrier's decision to seek judicial review was a breach of its common law duty of good faith and fair dealing and that its suit was groundless and frivolous. By agreement of the parties, Wolford's counterclaims were severed from the original action. On January 30, 2004, prior to trial, AHAC non-suited its original action against Wolford with prejudice. Subsequently, AHAC moved for summary judgment on Wolford's counterclaims. The trial court granted AHAC's summary judgment motion on February 1, 2005, and this appeal followed.

DISCUSSION

Wolford raises five issues on appeal, all of which contend that the existence of genuine issues of material fact should have precluded the trial court from granting AHAC's motion for summary judgment. Wolford specifically contends that (1) a fact issue exists regarding whether AHAC had a reasonable basis to seek judicial review of the appeal panel's decision or did so solely for the purpose of delaying benefit payments; (2) AHAC's non-suit creates a fact issue as to whether AHAC genuinely relied on Dr. Esses's report when it filed its suit against Wolford; (3) a fact issue exists as to when AHAC could have taken a non-suit (Wolford contends that waiting until shortly before the trial to do so suggests that AHAC filed suit merely to delay paying for Wolford's spinal surgery); (4) AHAC's failure to forward a certified copy of the appeals panel's decision to the trial court raises a fact issue regarding whether AHAC ever intended to pursue its suit; and (5) AHAC's failure to forward a certified copy of the appeals panel's decision to the trial court creates a fact issue as to whether AHAC's suit was frivolously filed for the purpose of delaying benefit payments. Because Wolford's contentions are so closely related—all having to do with actions allegedly showing that AHAC's suit appealing the administrative decision was filed solely for the purpose of delay and harassment—we review them together, rather than as separate issues on appeal.

Standard of Review

The standard of review for a traditional summary judgment is well established: (1) the movant for summary judgment has the burden of showing that there is no genuine issue of material fact and that he is therefore entitled to summary judgment as a matter of law; (2) in deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the non-movant will be taken as true; and (3) every reasonable inference must be indulged in favor of the non-movant and any doubts resolved in his favor. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex. 1985).

For a defendant to prevail on summary judgment, it must either show that there is no genuine issue of material fact concerning one or more essential elements of the plaintiff's cause of action or establish each element of an affirmative defense as a matter of law. Black v. Victoria Lloyds Ins. Co., 797 S.W.2d 20, 27 (Tex.1990). If the defendant disproves an element of the plaintiff's cause of action as a matter of law, summary judgment is appropriate. Friendswood Dev. Co. v. McDade & Co., 926 S.W.2d 280, 282 (Tex.1996). When necessary to establish a fact issue, the non-movant must present summary judgment evidence. Westland Oil Dev. Corp. v. Gulf Oil Corp., 637 S.W.2d 903, 907 (Tex.1982). When the summary judgment order does not state the specific grounds on which it was granted, the non-movant must show on appeal that no ground alleged in the motion is sufficient to support the granting of the summary judgment. Carr v. Brasher, 776 S.W.2d 567, 569 (Tex.1989).

Duty of Good Faith and Fair Dealing

A workers' compensation carrier has a duty to deal fairly and in good faith with injured employees. See The Universe Life Ins. Co. v. Giles, 950 S.W.2d 48, 50-51 (Tex.1997); Aranda v. Ins. Co. of N. Am., 748 S.W.2d 210, 212-13 (Tex.1988). The duty to treat the claims of injured employees fairly and in good faith arises from the special relationship between the insurer and insured. Aranda, 748 S.W.2d at 212. Because of the disparity in bargaining power between the two parties, the duty of good faith and fair dealing is necessary to insure that workers' compensation carriers do not exercise their leverage to unjustly dismiss the claims of injured employees. Id.

To successfully bring an action for breach of the duty of good faith and fair dealing, a workers' compensation claimant must show that his compensation carrier (1) delayed or denied payment of benefits; (2) without a reasonable basis for doing so; and (3) knew or should have known that no reasonable basis existed for the delay or denial of benefits. See Giles, 950 S.W.2d at 56. Thus, if the payment of benefits was not delayed or denied, no breach of the duty of good faith and fair dealing would attain as a matter of law. See id. Alternatively, even in the event that a carrier's actions did delay or deny benefits, a breach of the duty does not arise if such actions were reasonable. See id. In assessing reasonableness, a reviewing court must first determine the basis for a carrier's actions and then conduct a qualitative evaluation to determine if the carrier's reliance on this basis was reasonable. See Columbia Life Ins. Co. v. Miles, 923 S.W.2d 803, 809 (...