Opinion
NO. 03-16-00690-CV
08-29-2017
In re Murphy & Beane, Inc. and Viacom, Inc.
ORIGINAL PROCEEDING FROM TRAVIS COUNTY
MEMORANDUM OPINION
Relators Murphy & Beane, Inc. and Viacom, Inc. have filed a petition for writ of mandamus asking this Court to compel the trial court to set aside its order denying relators' summary-judgment motion and to enter an order granting relators' motion and dismissing real party in interest Melanie Steele's claims in the underlying lawsuit. See Tex. Gov't Code § 22.221; see also Tex. R. App. P. 52.1. We will conditionally grant the petition.
BACKGROUND
This original proceeding arises from a lawsuit that Steele filed against Murphy & Beane and Viacom alleging claims related to injuries she suffered when working as an independent contractor for Viacom in Austin, Texas. In the lawsuit, Steele asserts claims for Deceptive Trade Practices Act (DTPA) violations, fraud, fraudulent inducement, and gross negligence against Viacom and Murphy & Beane, a third-party administrator for workers' compensation claims. Steele alleges that after falling down two flights of stairs in the workplace on June 12, 2006, she suffered severe injuries including broken and cracked teeth, lacerations to the face and body, broken bones, a bruised back, a strained neck, torn meniscus in both knees ultimately resulting in double knee-replacement surgery, and head trauma. She further alleges that a Viacom employee took her to the hospital "so that she could receive medical care under Viacom's Self Insurance Group as a result of the injury occurring while working in the course and scope of her employment in Texas with Viacom." Steele also asserts that three days later she countersigned a Texas Workers' Compensation Work Status Report and began receiving regular Texas Workers' Compensation Status reports.
Steele attached the Texas Workers' Compensation Work Status Report, the California Employer's Report of Occupational Injury or Illness, and the California Workers' Compensation Claim Form to her response to relators' summary-judgment motion. The Texas Workers' Compensation Work Status Report that Steele signed informed her: "You have the right to free assistance from the Workers' Compensation Commission and may be entitled to certain medical and income benefits." The form provided a toll-free number that she could call for further information.
Three weeks later, Steele alleges, an agent acting on behalf of the relators spoke with her and told her that her case was complicated because the injury happened in Texas, but the company handling the claim was from California. Steele asserts that the agent never told her that the relators were seeking to transfer the claim from Texas to California, but that Murphy & Beane proceeded to do so by filing an Employer's Report of Occupational Injury or Illness in California with the Department of Industrial Relations two months after her injury. Steele further alleges that the relators failed to inform her that the case should be handled under the Texas workers' compensation system.
The California Workers' Compensation Claim Form dated August 23, 2006, appears to be signed by Steele. It also states that her address is in Texas and that the injury occurred in Texas.
Steele alleges various disputes arose over Murphy & Beane's handling of her claim, including a dispute early on over the medical necessity of total knee-replacement surgery, as well as disputes over Murphy & Beane's requirement that she fly to California to receive a Panel Qualified Medical Examination by a doctor provided by Murphy & Beane. She asserts that she found it increasingly difficult in the following years to receive medically necessary treatments "without either having to undertake unnecessarily difficult and repeated negotiations with Murphy & Beane, or just having the requested treatments flat out denied." She also alleges that Murphy & Beane never filed her claim as an open workers' compensation claim in Texas and "has misrepresented to Plaintiff [Steele] that (a) [Steele's] accident occurred in California, that (b) [Steele] was an employee located primarily in California, that the claim was a California claim, and not a Texas claim, that (c) she could not seek treatment from doctors of her choosing, that (d) she would have to travel to California to receive a [panel qualified medical examination], and that (e) Murphy & Beane could close her case for non-compliance." Steele further asserts that Murphy & Beane, acting on behalf of Viacom, has continuously injured her:
• by misrepresenting the nature of workers' compensation coverage available to Steele
• by applying the improper medical-treatment guidelines of California rather than Texas
• by not timely filing the injury notice in Texas
• by misrepresenting that the injury occurred in California
• by not properly registering the Self-Insured Group or Third-Party Administrator in Texas
• by noting that Steele was a regular employee domiciled in CaliforniaSteele sought relief in the form of actual damages, statutory DTPA treble economic damages, exemplary damages, and attorneys' fees.
• by not timely filing a notice of injury claim in California
• by actively obstructing Steele's ability to receive medically necessary treatment in her home state and
• by misrepresenting to Steele that her coverage could be cancelled by Murphy & Beane for not complying with requests to cease seeking treatment or for refusing to fly to California to receive a panel-qualified medical examination.
Steele specifically pled that the conduct of Murphy & Beane and Viacom falls outside of the claims-settlement process, and therefore, the "remedies provided by the Texas Workers' Compensation Act are not the exclusive remedies allowed by law." Along with their original answer, Murphy & Beane and Viacom filed a plea to the jurisdiction asserting that the trial court lacked subject-matter jurisdiction because Steele's claims fall within the exclusive jurisdiction that the Texas Legislature granted to the Texas Department of Insurance, Division of Workers' Compensation, to administer the workers' compensation system, relying on the Texas Supreme Court's decision in In re Crawford & Co., 458 S.W.3d 920 (Tex. 2015) (per curiam) (orig. proceeding). They later moved for traditional summary judgment seeking dismissal of Steele's claims on the grounds that the Division has exclusive jurisdiction over all of Steele's claims and that Steele failed to exhaust the administrative remedies under the Workers' Compensation Act with the Division. The trial court denied the summary-judgment motion, "due to the existence of genuine issues of material fact." Relators then filed this petition for writ of mandamus.
ANALYSIS
The Texas Supreme Court's opinion in In re Crawford & Co. controls the outcome of this case. In Crawford, the supreme court concluded that the Division had exclusive jurisdiction over the worker and his spouse's claims, which included numerous tort, contract, and statutory claims, and that the Act provided their exclusive remedies. Id. at 923. The court relied on the precedent it had established in Texas Mutual Insurance Co. v. Ruttiger, 381 S.W.3d 430 (Tex. 2012), when it concluded "that the Act provides the exclusive procedures and remedies for claims alleging that a workers' compensation carrier has improperly investigated, handled, or settled a workers' [sic] claim for benefits." In re Crawford, 458 S.W.3d at 923-24. Specifically, the court held in Ruttiger that "the Act bars claims for breach of the duty of good faith and fair dealing and claims under [Insurance Code] sections 541.060 and 542.003, not because those are the only claims the Act bars, but because those claims are necessarily based on the investigation and settlement of benefit claims." Id. at 926 (citing Ruttiger, 381 S.W.3d at 443-45) (emphasis added).
In Crawford, the court considered whether and how Ruttiger applied to claims that the worker and his spouse brought which had not been specifically addressed in Ruttiger. Id. at 925. Of particular relevance here, the court considered the worker and his spouse's common-law and statutory claims based on allegations of deception, fraud, and misrepresentation. Id. at 926. The court noted that the case before it presented a question not expressly addressed in Ruttiger: "whether the Division has exclusive jurisdiction over a claim for 'misrepresentation of an insurance policy' when the alleged misrepresentation occurs within the claims-settlement context." Id. at 927 (noting that analysis of misrepresentation claims was more complex because of Ruttiger's holding that Act does not necessarily bar claim for misrepresenting insurance policy under Insurance Code Section 541.061). The court held that the Division had exclusive jurisdiction over the claims because all of the misrepresentation-based claims complained of misrepresentations that Crawford allegedly made in connection with its investigation, handling, and settling of the worker and spouse's claims for workers' compensation benefits. Id.
Similarly here, we conclude that the Division has exclusive jurisdiction over Steele's claims, and she must first exhaust her administrative remedies before the Division. Steele attempts to differentiate her claims from the worker's claims in Crawford by arguing (1) that relators' alleged misrepresentation that her "claim would properly be filed in the state she lives, works and was injured in[] was made before any paperwork was filed" and thus before the claims-handling process began and (2) that this is a claim for misrepresentation of the insurance policy under Insurance Code Section 541.061, not a claim for unfair settlement practices under Section 541.060 (which would be barred by the holding in Ruttinger). We disagree with Steele's contentions that this alleged misrepresentation occurred before the claims-handling process began and that it was unrelated to relators' handling of her claim. Taking the facts in Steele's petition as true, as we must, the record indicates that the claims-handling process began when a Viacom employee took her to the hospital immediately after her injury, or at the latest, when Steele signed the Texas Workers' Compensation Work Status Report that she alleges is evidence of relators' misrepresentation. See Ruttiger, 381 S.W.3d at 441 ("The claims process begins when an employee reports a lost-time injury or occupational disease to the employer."); see also Tex. Lab. Code §§ 409.001(a) (establishing that employee or person acting on their behalf shall notify employer of injury not later than 30th day after date on which injury occurs), .021 (requiring insurance carrier to promptly begin payment of benefits required by Act). Steele's petition alleges that Steele was taken to the hospital by a Viacom employee "so that she could receive medical care under Viacom's Self Insurance Group as a result of the injury occurring while working in the course and scope of her employment in Texas with Viacom." Steele relies on the Texas Workers' Compensation Work Status Report that she and a doctor signed three days later as evidence that relators represented to her that her workers' compensation claim was a Texas claim before they filed documentation of her claim in California, but this report itself is a claim by an employee under the Division's rules. See 28 Tex. Admin. Code § 47.5 (2017) (Tex. Dep't of Ins., Div. of Workers' Compensation, Information Constituting a Claim) (providing that prescribed claim form or any written communications from injured employee claiming either medical care or compensation payments and giving her name, date and general nature of injury, and name of employer shall constitute claim). Therefore, the alleged misrepresentation was not made outside of the claims-handling process.
The Act's definition of "insurance carrier" includes "a certified self-insurer for workers' compensation insurance." Tex. Lab. Code § 401.011(27)(B). The parties do not appear to dispute that Viacom is a certified self-insurer. Steele alleges, however, that Murphy & Beane, as the third-party administrator acting on Viacom's behalf, has "not properly register[ed] the Self Insured Group or Third Party Administrator in Texas." To the extent that Steele alleges that Murphy & Beane was not the appropriate party to handle her claim, we note that is a complaint related to the claims-handling process.
Steele characterizes the alleged misrepresentation that her claim would be filed with the Division as a misrepresentation of the policy occurring outside of the claims-handling and claims-settlement context, which she asserts brings her misrepresentation claims within Insurance Code Section 541.061 instead of Section 541.060. Compare Tex. Ins. Code § 541.060 (prohibiting unfair settlement practices including misrepresenting to claimant material fact or policy provision relating to coverage of claim at issue), with id. § 541.061 (prohibiting misrepresentation of insurance policy including by making untrue statement of material fact). As Crawford advises, however, "[w]hether the Act provides the exclusive process and remedies . . . does not depend on the label of the cause of action asserted," and "claimants may not recast claims to avoid statutory requirements or to qualify for statutory protections." 458 S.W.3d at 926. When assessing whether a claim falls within the Division's exclusive jurisdiction, we must look at the substance of the claim. Id. In this case, Steele argues in response to relators' mandamus petition that relators' alleged misrepresentation that the claim would be filed in Texas led to the problems with "wrongfully undertaken investigations, mishandling of utilization reviews, improper medical standards, ill-advised and botched surgeries, and attempts of settling [Steele's] claim under the wrong state workers' compensation scheme which continues to this day." In other words, Steele contends that all of the problems that she has had with the claims-handling and claims-settlement process stem from the claim being filed in California instead of Texas as relators had allegedly originally indicated it would be—which is itself a complaint about the way relators handled her claim, not a complaint about a representation of a policy term or coverage. As the court pointed out in Crawford,
[t]he Act specifically addresses and prohibits a carrier from making misrepresentations, including misrepresentations "to an employee" regarding the Act's provisions and "the reason for not paying benefits or terminating or reducing the payment of benefits." Tex. Lab. Code § 415.002(a)(1), (13). The Act's comprehensive system for resolving workers' compensation claims encompasses prohibitions against fraud and misrepresentations made within the claims-settlement context, and grants the Division authority to regulate and sanction any such conduct.Id. at 927; see also Tex. Lab. Code § 415.021(a) (providing for assessment of administrative penalties not to exceed $25,000 per day per occurrence). As in Crawford, the misrepresentation-based claims that Steele alleges in this case (including her DTPA claim based on the alleged misrepresentation that her claim was a Texas claim and would be filed here) all complain of misrepresentations that relators allegedly made in connection with their investigation, handling, and settling of Steele's claim for workers' compensation benefits. Accordingly, we hold that the Division has exclusive jurisdiction to address those claims.
Steele also asserts that her claims do not fall within the Division's exclusive jurisdiction because she is not seeking recovery of workers' compensation benefits, but instead she seeks DTPA damages for her claim under Insurance Code Section 541.061 that the relators misrepresented the insurance policy. The Division's exclusive jurisdiction extends to all issues raised in the context of claims whose resolution requires a determination of the claimant's entitlement to workers' compensation benefits. See American Motorists Ins. Co. v. Fodge, 63 S.W.3d 801, 804 (Tex. 2001) (holding that common-law claim seeking damages for wrongful deprivation of workers' compensation benefits fell within Division's exclusive jurisdiction); Texas Mut. Ins. Co. v. Texas Dept. of Ins., Div. of Workers' Comp., 214 S.W.3d 613, 617, 619 (Tex. App.—Austin 2006, no pet.) (holding that Division has jurisdiction to determine dates of workers' compensation coverage within context of pending claim requiring determination of claimant's entitlement to workers' compensation benefits). To prevail on her claims in the underlying lawsuit seeking damages for relators' alleged misrepresentations, Steele necessarily would have to demonstrate her entitlement to benefits.
Steele argues that the Division lacks exclusive jurisdiction over her case for two additional reasons: (1) her claim was never registered with the Texas system and (2) the Division cannot have exclusive jurisdiction over her claims because she has been receiving benefits through the California workers' compensation system, relying on Mulgrew v. Spectraseis, Inc., 436 S.W.3d 798, 800-01 (Tex. App.—Houston [14th Dist.] 2014, pet. denied). We will address these arguments together.
Mulgrew does not support Steele's argument that the Division cannot have exclusive jurisdiction over her claims. In that case, the Texas employer had purchased workers' compensation coverage through a Canadian workers' compensation board for the duration of a Canadian project. Id. at 799. It hired a citizen of the United Kingdom whom it recruited in the United Kingdom to work on the Canadian project. Id. The worker was injured in Canada and obtained treatment in Canada, but neither the worker nor the employer reported that the injury was work related. Id. The worker later sued the employer in Texas for his injuries, and the parties did not dispute that Canadian law governed his claims. Id. The employer sought to dismiss the worker's case for lack of subject-matter jurisdiction, claiming that the Canadian board had exclusive jurisdiction over the worker's claims, and the trial court granted its motion. Id. at799- 800. On appeal, the court held that the trial court erred by dismissing the case because the Texas Legislature can only grant exclusive jurisdiction to Texas state agencies to make an initial determination in a dispute. Id. at 800-01.
In this case, even though the workers' compensation claim was filed in California, Steele resides in Texas and the injury occurred in Texas while Steele was employed in Texas. The central complaint that she makes is that the claim should have been filed here instead of in California. Neither party has stipulated that California law should apply. The holding in Mulgrew is inapplicable because relators are not contending that the California workers' compensation system has exclusive jurisdiction over Steele's claims.
Moreover, Steele's receipt of benefits through the California workers' compensation system does not preclude the Division from exercising its exclusive jurisdiction now that she has filed suit in Texas. Murphy & Beane and Viacom acknowledge in their briefing that Steele's claim remains open, and they acknowledge that she is entitled to additional benefits; they seek to have the Division determine all the parties' past and future disputes. The Act contemplates that jurisdictional conflicts may arise with other jurisdictions, see Tex. Lab. Code § 406.074 (providing for interjurisdictional agreements), and it also provides that benefits paid in another state will be credited toward amounts that a worker later claims in Texas when the injured employee accepts benefits under the laws of another jurisdiction without having elected to do so, see id. § 406.075(b). Relators contend that Steele must present her dispute to the Division and exhaust her administrative remedies. Although both sides failed to file any claim or report with the Division, relators acknowledge that Steele's complaint may still be presented to the Division because the Act provides that the limitations period for the employee to file its claim is tolled until the date the employer's report is filed with the Division. See id. §§ 409.003 (requiring employee to file claim for compensation no later than one year after injury), .005 (requiring insurance carrier on behalf of employer to file injury report with Division no later than 7th day after report received by carrier), .008 (tolling period to file claim under Section 409.003 until report required under Section 409.005 is furnished). We conclude that because the Division has exclusive jurisdiction over Steele's claims, until she exhausts her administrative remedies, the trial court lacks jurisdiction to hear her case.
CONCLUSION
Assuming, as we must, that all of Steele's factual allegations in her pleading are true, it is evident from the face of her pleading that the trial court lacked jurisdiction over her claims as a matter of law. All of her claims are related to the relators' handling and settlement of her workers' compensation claim after it arose—Steele has not alleged any misrepresentation that takes her claims out of the Division's exclusive jurisdiction, and it does not appear that she can affirmatively plead facts that would invoke the trial court's jurisdiction. As a result, the trial court erred by denying relators' summary-judgment motion. See Texas Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226-27 (Tex. 2004) (holding plea to jurisdiction challenging pleadings may be granted without allowing plaintiff opportunity to amend when pleadings negate jurisdiction).
We further conclude that relators are entitled to mandamus relief. See In re Crawford, 458 S.W.3d at 928 (granting mandamus to require trial court to dismiss claims within Division's exclusive jurisdiction); In re Southwestern Bell Tel. Co., 235 S.W.3d 619, 624 (Tex. 2007) (orig. proceeding) (granting mandamus to require dismissal of claims over which Public Utility Commission had exclusive jurisdiction because "[a]llowing the trial court to proceed if the PUC has exclusive jurisdiction would disrupt the orderly processes of government"); In re Entergy Corp., 142 S.W.3d 316, 321 (Tex. 2004) (orig. proceeding) (same). Mandamus relief is an extraordinary remedy that issues only if the court clearly abused its discretion and the relator has no adequate remedy by appeal, but it is appropriate to correct a trial court's erroneous decision to proceed in a case in which a state agency has exclusive jurisdiction. In re Southwestern Bell Tel. Co., 235 S.W.3d at 623-24; In re Entergy Corp., 142 S.W.3d at 320-21. Steele argues that relators are not entitled to mandamus relief because they did not file their petition for writ of mandamus until three-and-one-half months after the trial court denied their summary-judgment motion. Although courts sometimes find that mandamus relief should be denied when a party does not diligently pursue its rights and the record reveals no justification for delay, relators explained on reply that the parties engaged in settlement discussions for the three months following the trial court's ruling and that they requested the record and began preparing the petition once it became apparent that settlement was unlikely. See, e.g., In re Southwestern Bell Tel. Co., 235 S.W.3d at 624 (concluding delay of more than one year was justified). Furthermore, Steele did not contend that she was prejudiced by any delay. See In re Oceanografia, S.A. de C.V., 494 S.W.3d 728, 731 (Tex. 2016) (orig. proceeding) (analyzing prejudice arguments of real parties in interest and determining that they had not shown prejudice from any delay).
Accordingly, we conditionally grant the petition for writ of mandamus and direct the trial court to withdraw its order denying relators' summary-judgment motion and dismiss Steele's claims for lack of subject-matter jurisdiction. See Tex. R. App. P. 52.8(c). The writ will issue only if the court does not comply with this opinion.
/s/_________
Cindy Olson Bourland, Justice Before Justices Puryear, Field, and Bourland Filed: August 29, 2017