Donald Davis v. American Casualty Company of Reading, PA ( 2012 )

NO. 07-11-00256-CV
IN THE COURT OF APPEALS
FOR THE SEVENTH DISTRICT OF TEXAS
AT AMARILLO
PANEL A
JANUARY 27, 2012
DONALD DAVIS, APPELLANT/CROSS-APPELLEE
v.
AMERICAN CASUALTY COMPANY OF READING, PA,
APPELLEE/CROSS-APPELLANT
FROM THE 251ST DISTRICT COURT OF POTTER COUNTY;
NO. 97,526-C; HONORABLE ANA ESTEVEZ, JUDGE
Before CAMPBELL and HANCOCK and PIRTLE, JJ.
OPINION
Cross-appellant, American Casualty Co. of Reading, Pa. (ACC), appeals an
order from the trial court denying its plea to the jurisdiction. In the same cause, the trial
court granted a motion for partial summary judgment in favor of Donald Davis on the
issue of the correct amount of temporary insurance benefits (TIB) that he should have
received. ACC appeals the granting of the motion for partial summary judgment. The
trial court also granted a motion to sever and abate the bad faith case filed by Davis.
Davis filed a notice of appeal from the trial court’s granting of the motion to sever and
abate his bad faith claims. We reverse and render.
Factual and Procedural Background
Donald Davis was injured while in the course and scope of his employment.
Subsequently, Davis filed for benefits pursuant to Title 5 of the Texas Labor Code. See
TEX. LAB. CODE ANN. §§ 409 - 419 (West Supp. 2011).1 The compensability of Davis’s
injury was never contested by ACC. The contested issue was a reduction of Davis’s
TIB for the amount of the health insurance premium that his employer continued to pay
after the date of the injury. In order to contest the action of ACC characterizing these
employer payments as post-injury benefits, a benefits review conference (BRC) was
conducted. This resulted in a finding against Davis. Davis then requested a Contested
Case Hearing (CCH). The decision of the hearing officer in the CCH was mailed to all
parties on January 7, 2009. The hearing officer found against Davis on the TIB issue.
Davis is statutorily presumed to have received the hearing officer’s decision by January
12, 2009; however, the record reflects that the original mailing to Davis was returned by
the Texas Department of Criminal Justice to the Texas Department of Insurance,
Division of Workers’ Compensation. Subsequently, Davis received the notice,
according to his sworn pleadings, on February 24, 2009. Thereafter, Davis filed a
petition for review before the Appeals Panel of the Division of Workers’ Compensation.
The Appeals Panel issued its decision on May 4, 2009. The record reflects that,
1
Further reference to the Texas Labor Code Ann. will be by reference to “section
___” or “§ ____.”
2
according to the records of the Division of Workers’ Compensation, the Appeals Panel
decision was mailed to all parties on that same day.
Davis filed his suit for judicial review on April 28, 2009. This was six days before
the Appeals Panel decision was rendered. ACC filed its original plea to the jurisdiction
of the trial court on July 17, 2009. The trial court’s order denying ACC’s original plea to
the jurisdiction was filed on July 21, 2009. Davis filed his first amended pleading on
July 29, 2009. ACC subsequently filed a motion to reconsider its plea to the jurisdiction
on September 30, 2010. The trial court heard this motion to reconsider on March 9,
2011. This plea to the jurisdiction was subsequently overruled by order of the trial court
entered on March 10, 2011. ACC is appealing the denial of the plea to the jurisdiction.
During the period prior to the trial court’s ruling on the re-urged plea to the
jurisdiction, Davis filed a motion for partial summary judgment on the issue of the TIB
reduction for the insurance premiums paid by his employer. Davis’s motion for partial
summary judgment was considered by the trial court, and an order granting the partial
summary judgment on the issue of the TIB deduction for health insurance benefits was
entered on March 10, 2011. ACC is appealing the granting of the partial summary
judgment.
On April 5, 2011, ACC filed a motion to sever and abate all of Davis’s bad faith
claims from the workers’ compensation case. The trial court granted the motion and
entered an order granting the same on June 30, 2011. Davis is appealing the order of
severance and abatement.
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We will reverse the trial court’s order denying the plea to the jurisdiction, and
dismiss the workers’ compensation portion of the case for the reasons hereafter
expressed.
Finality of the Judgment
As reflected in the factual and procedural background section of this opinion,
Davis filed suit claiming that the Workers’ Compensation Division erred in determining
that the employer’s portion of the health insurance benefits were properly denoted as
post-injury earnings (PIE) and, therefore, deductible from the TIB due Davis. This was
the subject of Davis’s motion for partial summary judgment. The trial court agreed with
Davis and granted the motion for partial summary judgment. Therefore, all issues
involving judicial determination of the workers’ compensation claim were disposed of.
The only other matters pending were the bad faith claims filed by Davis against ACC.
These were the claims that were the subject of the motion to sever filed by ACC. The
trial court granted the motion to sever and Davis has appealed that decision.
We review a decision to grant a severance under an abuse of discretion
standard. See F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680, 693 (Tex.
2007). A trial court’s ruling is an abuse of discretion when it is made arbitrarily or
without regard to guiding legal principles. See Goode v. Shoukfeh, 943 S.W.2d 441,
446 (Tex. 1997). A claim is properly severable if 1) the controversy involves more than
one cause of action, 2) the severed claim is one that would be the proper subject of a
lawsuit if independently asserted, and 3) the severed claim is not so interwoven with the
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remaining action that they involve the same facts and issues. See F.F.P. Operating
Partners, L.P., 237 S.W.3d at 693.
After reviewing the facts of Davis’s allegations against ACC, we find that the bad
faith claims are properly severable. They are different causes of actions that could be
asserted independently, and the factual basis for the bad faith claims are not so
interwoven with the facts of the workers’ compensation case as to require the trial court
to maintain the bad faith action in the workers’ compensation case. Therefore, the trial
court did not abuse its discretion in granting the severance. Davis’s issue to the
contrary is overruled.
Since the trial court did not err in granting the severance, the judgment of the trial
court granting the partial summary judgment is a final decision and appealable because
the same disposes of all of the parties and claims that have not been severed. See
Lehmann v. Har-Con Corp., 39 S.W.3d 191, 195 (Tex. 2001).
Plea to the Jurisdiction of the Trial Court
ACC presents two different complaints regarding the trial court’s rulings on its
plea to the jurisdiction. First, ACC contends that Davis failed to exhaust his
administrative remedies. Second, ACC contends that Davis failed to file suit in a timely
manner.
Standard of Review
Whether a trial court has subject matter jurisdiction is a question of law that we
review de novo. See Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226
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(Tex. 2004). Whether the uncontroverted evidence of jurisdictional facts demonstrates
subject matter jurisdiction is a question of law. See id.
Workers’ Compensation Cases
The Texas Labor Code provides for a comprehensive process to resolve issues
surrounding compensation to employees injured in the course and scope of their
employment. See §§ 409 - 419. The process as outlined is, for the most part, an
administrative process designed to resolve disputes in four steps. See Tex. Mut. Ins.
Co. v. Ruttiger, No. 08-0751, 2011 Tex. LEXIS 600, at *14 (Tex. Aug. 14, 2011). These
steps are a BRC, CCH, review by an administrative Appeals Panel, and judicial review.
Id. (citing §§ 410.021, 410.104, 410.201, and 410.251).
As applicable to the case before the Court, there are certain deadlines that
attend to the various steps in the process of claim determination. The decision by a
hearing officer in a CCH is final pending an appeal to the Appeals Panel. § 410.169.
To be timely, an appeal of a hearing officer’s decision must be filed with the Division’s
Appeals Panel by the fifteenth day after the day on which the decision was received
from the Division. § 410.202(a). If either party is not satisfied with the decision of the
Appeals Panel, judicial review of the Appeals Panel decision may be sought if the party
filing suit has exhausted its administrative remedies. § 410.251. Any suit seeking
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judicial determination of the issues decided by the Appeals Panel must be brought
within 40 days after the Appeals Panel decision is filed with the Division.2 § 410.252.
Failure to Exhaust Administrative Remedies
ACC contends that Davis failed to exhaust his administrative remedies and is,
therefore, foreclosed from filing for judicial review. According to ACC, this is because
Davis did not request review by the Division’s Appeals Panel in a timely manner. A
request for review by the Appeals Panel must be filed with the Division “not later than
the 15th day after the date on which the decision of the hearing officer is received from
the Division.” § 410.202(a). Further, according to the Division’s rules, a challenging
party is deemed to have received the decision of the hearing officer five days after the
decision was mailed. 28 TEX. ADMIN. CODE § 102.5(d) (2011) (Tex. Dep’t of Ins.,
General Rules for Written Communications to and from the Commission).
The record of the Division that is part of this record reflects that the hearing
officer’s decision was dated January 7, 2009. Under the presumptive rule, Davis is
deemed to have received the decision on January 12, 2009. ACC posits that Davis’s
appeal request was due to be filed on or before February 3, 2009. The record reflects
that the Division received the request for appeal of the CCH hearing officer’s decision
on March 3, 2009. Thus, according to ACC, the appeal was not timely and, because
there was no timely appeal, Davis did not exhaust his administrative remedies.
2
The Labor Code was amended, effective September 1, 2009, enlarging the
filing deadline to 45 days; however, for purposes of this litigation, the deadline remains
at 40 days.
7
However, the record further reflects that the Appeals Panel did, in fact, consider
the case. The Appeals Panel issued a decision on May 4, 2009. The decision issued
by the Appeals Panel on that day contained the following language:
Accordingly, this constitutes notice that the Hearing Officer’s Decision and
Order signed on December 18, 2008[,] became final on the date listed at
the top of this notice under the provisions of § 410.169 or § 410.204(c) of
the Texas Labor Code. If the Hearing Officer’s Decision and Order
became final under § 410.169, a notice of untimely appeal is enclosed.
Section 410.169 is the provision that makes the hearing officer’s decision final unless
timely appealed to the Appeals Panel. § 410.169. The record contains no notice of
untimely appeal. Section 410.204(c) is the provision that allows the decision of the
hearing officer to become final without the issuance of a decision of the Appeals Panel.
§ 410.204(c). From this record and the interplay of the two sections of the law cited, it is
clear to the Court that the Appeals Panel considered Davis’s appeal and overruled the
same. Therefore, contrary to ACC’s contentions, Davis did exhaust his administrative
remedies. ACC’s first issue is overruled.
Timeliness of Suit For Judicial Review
ACC’s next issue contends that Davis’s lawsuit was not timely filed and,
therefore, the trial court did not have subject matter jurisdiction. We begin by observing
that Davis filed his original petition on April 28, 2009. The record reflects that the
Appeals Panel decision is dated May 4, 2009. Therefore, on the face of the record,
Davis’s petition was filed some six days before the Appeals Panel final decision.
Subsequently, Davis filed a first amended petition on July 29, 2009.
8
Initially, we observe that section 410.251, styled “Exhaustion of Remedies”
states:
A party that has exhausted its administrative remedies under this subtitle
and that is aggrieved by a final decision of the Appeals Panel may seek
judicial review under this subchapter and Subchapter G, if applicable.
§ 410.251. As we have previously determined that Davis did exhaust his administrative
remedies, the initial question before us concerns whether there was a final decision of
the Appeals Panel at the time Davis sought judicial review by filing suit. From the
record before us, the answer to that inquiry is no. At the time Davis filed his original
petition, the Appeals Panel had yet to issue its decision. Because the original petition
was filed before the Appeals Panel decision, it was ineffective to invoke the subject
matter jurisdiction of the trial court. § 410.251.
Does this mean that the trial court did not obtain subject matter jurisdiction over
Davis’s request for judicial review? Davis did file an amended petition after the Appeals
Panel decision was filed with the Division. However, Davis’s amended petition was filed
some 86 days after the Appeals Panel decision. The statute requires that the petition
seeking judicial review be filed within 40 days after the date on which the decision of the
Appeals Panel was filed with the Division. § 410.252. When the deemed receipt rule is
applied to the Appeals Panel decision, the 40th day would have been June 13, 2009,
which was a Saturday. This would have resulted in the petition seeking judicial review
being due on June 15, 2009. See TEX. R. CIV. P. 4; Holmes v. Tex. Mut. Ins. Co., 335
S.W.3d 738, 741 (Tex.App.—El Paso 2011, pet. abated).
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This Court has previously sustained a trial court’s dismissal of a workers’
compensation petition for judicial review that was not filed within the 40 day requirement
of section 410.251. See State Office of Risk Mgmt. v. Herrera, 288 S.W.3d 543, 549
(Tex.App.—Amarillo 2009, no pet.). Other of our sister appellate courts have held that
filing within the 40 day period required by the statute is mandatory and jurisdictional.
See Fire & Cas. Ins. Co. of Conn. v. Miranda, 293 S.W.3d 620, 624 (Tex.App.—San
Antonio 2009, no pet.); Johnson v. United Parcel Serv., 36 S.W.3d 918, 921
(Tex.App.—Dallas 2001, pet. denied). We agree with the thought that the 40 day
requirement is mandatory and jurisdictional. Id.
However, Davis contends that the premature filing figuratively held his place in
line until he could file after the Appeals Panel decision was filed with the Division. The
problem with this approach is that it completely discounts the jurisdictional aspect of our
previous holding. If the 40 day time period for filing for judicial review were a statute of
limitations instead of a jurisdictional requirement, this theory might have more traction.
See Tex. Emp’t Comm’n v. Stewart Oil Co., 153 Tex. 247, 267 S.W.2d 137, 138 (1954)
(holding that, when petition remains in possession of clerk and was in possession of
clerk when the court would have attained jurisdiction, the case is properly before the
trial court). The Stewart case was interpreting the statute of limitations regarding an
appeal of the action of the Texas Employment Commission. By its own terms, Stewart
did not deal with a statute that had been determined to be jurisdictional in nature.
Accordingly, we decline to follow Davis’s contention.
10
Because we have held that the premature filing of an original petition did not
properly invoke the jurisdiction of the trial court, we conclude that an amended pleading
filed after the expiration of the 40 day period defined by statute cannot relate back and
grant jurisdiction to the trial court where it did not previously exist. Johnson, 36 S.W.3d
at 921 (holding, even though the original suit was timely filed but named an improper
party, amending the lawsuit after the expiration of the 40 day period for appealing the
decision of the Appeals Panel did not confer jurisdiction upon the trial court).
Accordingly, we sustain ACC’s second issue and find that the trial court erred in denying
its plea to the jurisdiction.
Davis further contends that he was never served with the Appeals Panel decision
until after the 40 day deadline had passed. The record reflects that, during the initial
BRC, Davis was asked about the proper address to mail all his correspondence
regarding his claim. He provided, “12071 FM 3522, Abilene, TX 79601-8749.” The
record reflects that the Appeals Panel decision was mailed to that address. Pursuant to
the rules in the Texas Administrative Code, Davis is deemed to have received the notice
of the Appeals Panel decision five days after the same was mailed. See 28 TEX. ADMIN.
CODE § 102.5(d). We are not unmindful that the quoted rule contains a provision stating
that, “unless the great weight of evidence indicates otherwise,” the deemed date of
delivery five days after the notice was mailed controls. However, in reviewing the
record, we note a lack of evidence regarding Davis’s receipt of the Appeals Panel
decision, and a significant amount of evidence regarding when Davis received the CCH
decision. At the end of the day, the only evidence concerning delivery or non-delivery of
the Appeals Panel decision is Davis’s statement that he never got a decision from the
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Appeals Panel. This assertion standing alone is not “great weight of the evidence”
referred to in the rule. Finally, the record does reflect that there were issues regarding
the delivery of the CCH decision because the Division was not including Davis’s inmate
number as part of the address. However, the record contains nothing indicating that
Davis ever requested the inmate number be added to the address where he would
receive mail regarding his claim for workers’ compensation benefits. The same rule
referred to above contains the provision that, “All written communications to the
claimant. . . . will be sent to the most recent address . . . supplied on either . . . verbal
communication from the claimant, . . .” Id. § 102.5(a). The only address ever furnished
by the claimant is that shown above. Therefore, Davis is deemed to have received the
Appeals Panel decision within five days of the date the same was mailed. That date
would have been May 9, 2009. Filing an amended petition on July 29, 2009, would not
grant jurisdiction to the trial court.
Having sustained ACC’s second issue, and because we have found that the
severance was properly granted, thereby making the judgment of the trial court on
Davis’s partial summary judgment a final appealable judgment, we need not address
ACC’s third issue regarding the correctness of that partial summary judgment. See TEX.
R. APP. P. 47.1.
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Conclusion
Having determined that the trial court erred in denying ACC’s plea to the
jurisdiction, we reverse and render, ordering that the judicial review of the workers’
compensation case be dismissed.
Mackey K. Hancock
Justice
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