Ace Property & Casualty Insurance Co. v. Homer Ladd ( 2022 )

IN THE
TENTH COURT OF APPEALS
No. 10-17-00273-CV
ACE PROPERTY & CASUALTY INSURANCE CO.,
Appellant
v.
HOMER LADD,
Appellee
From the 414th District Court
McLennan County, Texas
Trial Court No. 2014-2948-5
MEMORANDUM OPINION
Ace Property and Casualty Company ("Ace") appeals from a judgment that
overturned a decision of the appeals panel of the Texas Department of Insurance,
Division of Workers' Compensation ("DWC") and granted judgment in favor of Homer
Ladd ("Ladd"). Ladd filed a cross-appeal, challenging the part of the trial court's
judgment granting pleas to the jurisdiction of Ace, the DWC, and the Commissioner of
the Division, who had been sued in his official capacity. In Ace's appeal, Ace complains
that the trial court erred by granting Ladd's traditional motion for summary judgment;
that the trial court erred by denying Ace's no-evidence motion for summary judgment;
and that the trial court erred in its award of post-judgment interest in addition to interest
established in the Labor Code. In his cross-appeal, Ladd complains that the trial court
erred by granting the pleas to the jurisdiction filed by Ace, the DWC, and the
Commissioner of the Division. We reverse the trial court’s judgment granting Ladd's
traditional motion for summary judgment, affirm the trial court's denial of Ace's no-
evidence motion for summary judgment, affirm the trial court’s granting of the pleas to
the jurisdiction of Ace, the DWC, and the Commissioner, and remand this proceeding to
the trial court for further proceedings.
BACKGROUND FACTS
Ladd was originally injured with what was described as a "lumbar strain" on
February 6, 2000. He underwent an operation called a laminectomy in 2000, which had
been preauthorized by Ace, and Ace paid the expenses of that surgery. Ace was the
workers' compensation insurance carrier for Ladd's employer. Ladd was found to have
reached maximum medical improvement ("MMI") in October of 2001, and an impairment
rating of 20% was set. Ace paid benefits to Ladd for the maximum allowable time at that
rate. In 2010, Ladd sought payment for treatment for "post-laminectomy syndrome of
the lumbar region," which was denied. At some point after that, a review began as to
whether Ladd's injury in 2000 was a producing cause of his post-laminectomy syndrome
Ace Prop. & Cas. Ins. Co. v. Ladd Page 2
of the lumbar region, myalgia, and myositis, and this administrative proceeding
commenced. In 2013, a determination was made by a hearing officer of the DWC after a
contested case hearing that Ladd's post-laminectomy syndrome of the lumbar region,
myalgia, and myositis were not caused or aggravated by Ladd’s prior compensable injury
of February 6, 2000. This was the sole issue presented to and considered by the hearing
officer in the contested case hearing. Ladd appealed this issue to the DWC’s appeals
panel, who affirmed the hearing officer’s decision by operation of law.
Ladd then filed suit in the district court challenging the adverse decision and
adding claims seeking declaratory relief against Ace, the DWC, and the Commissioner of
the Division. The DWC, the Commissioner, and Ace filed pleas to the jurisdiction, with
the DWC and the Commissioner jointly asserting sovereign immunity and Ace asserting
that Ladd’s request for declaratory relief was beyond the trial court’s jurisdiction because
it sought consideration of issues not previously adjudicated by the DWC. The trial court
granted the pleas to the jurisdiction filed by Ace and the DWC and the Commissioner
and dismissed the declaratory judgment claims in their entirety and dismissed all claims
against the DWC and the Commissioner with prejudice.
Ace then filed a no-evidence motion for summary judgment, and Ladd filed a
traditional motion for summary judgment, alleging that Ace’s complaint was made
untimely and had been waived. The trial court then granted summary judgment in favor
of Ladd on Ladd's motion for summary judgment and denied Ace's no-evidence motion
Ace Prop. & Cas. Ins. Co. v. Ladd Page 3
for summary judgment. The trial court entered a second order granting Ace's plea to the
jurisdiction. The trial court entered a final judgment in favor of Ladd, found error in the
opinion of the appeals panel and the hearing officer that Ladd's post-laminectomy
syndrome of the lumbar region, myalgia, and myositis were not caused by Ladd's
compensable injury in 2000, and awarded judgment in favor of Ladd with post-judgment
interest on any recovery. Ace and Ladd have appealed the judgment of the trial court.
Because the trial court granted the pleas to the jurisdiction prior to the motions for
summary judgment, we will address Ladd's cross-appeal first.
LADD'S CROSS-APPEAL
Ladd filed a cross-appeal against Ace, the DWC, and the Commissioner
complaining that the trial court erred by granting their pleas to the jurisdiction. In his
petition to the trial court, Ladd sought the following declarations pursuant to the
Uniform Declaratory Judgment Act ("UDJA"):
1. That spinal surgeries paid for by workers' compensation insurance carriers,
just like any preauthorized surgical treatments: (1) become part of the
compensable injury and (2) for which surgeries the insurance carriers are
liable for all medically necessary care and subsequently related necessary
medical care for an injured worker's lifetime;
2. that if no dispute exists as to maximum medical improvement or the
impairment rating of an injured worker at the end of the 1st quarter of
supplemental income benefits, then the date of maximum medical
improvement and impairment rating are final and binding on the insurance
carrier under the Texas Workers' Compensation Act and DWC Rules. This
requested declaration includes that the compensable injury includes all the
injuries, diagnoses and conditions included in determining the date of
maximum medical improvement and the impairment rating which were
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not timely disputed;
3. that maximum medical improvement and impairment ratings under the
Texas Workers' Compensation Act must take into consideration insurance
carrier liable surgeries, including spinal surgeries, and the effects of the
surgeries when the surgeries occur prior to maximum medical
improvement being reached; and
4. that surgically treated injuries including the spine are part of the
compensable injuries along with all other injuries not timely disputed for
which injuries workers are entitled to all reasonably required lifetime
medical care. This [sic] compensable injuries include all provided medical
treatment, including surgeries, and the results and effects of such treatment.
The DWC and the Commissioner were included with Ace as defendants and as
parties against whom Ladd was seeking the declaratory judgment in Ladd's petition. Ace,
the DWC, and the Commissioner filed pleas to the jurisdiction. Ace's plea to the
jurisdiction alleged that the trial court did not have subject matter jurisdiction over the
declaratory claims sought by Ladd because they had not been presented to the appeals
panel prior to filing this action in the district court. The DWC and the commissioner's
plea alleged that sovereign immunity had not been waived as to them regarding any of
Ladd's claims, and therefore the DWC and the Commissioner were immune from Ladd's
suit. The trial court granted each of the pleas to the jurisdiction.
ACE'S PLEA TO THE JURISDICTION
In Ace's plea to the jurisdiction, Ace argued that the trial court did not have
jurisdiction over the UDJA claims asserted by Ladd because those issues had not been
raised before the appeals panel or during the contested case hearing at the administrative
Ace Prop. & Cas. Ins. Co. v. Ladd Page 5
level, which was required prior to filing those claims in the trial court. Section 410.302 of
the Texas Labor Code limits the issues that can be raised on judicial review at trial to
those issues decided by the appeals panel, stating in relevant part:
"A trial under this subchapter is limited to issues decided by the appeals
panel and on which judicial review is sought. The pleadings must
specifically set forth the determinations of the appeals panel by which the
party is aggrieved."
TEX. LAB. CODE ANN. § 410.302(b). The sole issue before the appeals panel had been: "Does
the compensable injury of February 6, 2000 extend to and include injuries of post-
laminectomy syndrome of the lumbar region, myalgia, and myositis?"
Whether a trial court has subject-matter jurisdiction is a matter of law that we
review de novo. See Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226, 228
(Tex. 2004); Tex. Natural Res. Conservation Comm'n v. IT—Davy, 74 S.W.3d 849, 855 (Tex.
2002). "When an agency has exclusive jurisdiction and the plaintiff has not exhausted
administrative remedies, the trial court lacks subject-matter jurisdiction and must dismiss
any claim within the agency's exclusive jurisdiction." In re Accident Fund Gen. Ins. Co., 543
S.W.3d 750, 752 (Tex. 2017) (orig. proceeding) (citing In re Entergy Corp., 142 S.W.3d 316,
321-22 (Tex. 2004) (orig. proceeding)).
"The [Texas] Workers' Compensation Act 'provides the exclusive procedures and
remedies for claims alleging that a workers' compensation carrier has improperly
investigated, handled, or settled a worker's claim for benefits.'" Id. at 752-53 (citing In re
Crawford & Co., 458 S.W.3d 920, 923-29 (Tex. 2015) (concluding "that a host of tort,
Ace Prop. & Cas. Ins. Co. v. Ladd Page 6
contract, and statutory claims could not go forward against the carrier in the trial court"
absent exhaustion of administrative remedies)); Tex. Mut. Ins. Co. v. Ruttiger, 381 S.W.3d
430, 443-45, 450-51 (Tex. 2012) (concluding that the failure to exhaust administrative
remedies "preclude[d] certain Insurance Code and common-law bad-faith claims against
the compensation carrier").
In performing the review regarding the exhaustion of Ladd's administrative
remedies, as an appellate court, we do not look to the merits of the case but consider only
the pleadings and evidence relevant to the jurisdictional inquiry. See Miranda, 133 S.W.3d
at 227; Cty. of Cameron v. Brown, 80 S.W.3d 549, 555 (Tex. 2002). Where, as here, "a plea to
the jurisdiction challenges the existence of jurisdictional facts, we consider relevant
evidence submitted by the parties when necessary to resolve the jurisdictional issues
raised, as the trial court is required to do." Transformative Learning Sys. v. Tex. Educ.
Agency, 572 S.W.3d 281, 286 (Tex. App.—Austin 2018, no pet.) (quoting Miranda, 133
S.W.3d at 227). "[I]n a case in which the jurisdictional challenge implicates the merits of
the plaintiffs' cause of action and the plea to the jurisdiction includes evidence, the trial
court reviews the relevant evidence to determine if a fact issue exists." Id. (quoting
Miranda, 133 S.W.3d at 227). The party asserting the plea must overcome a burden similar
to a movant's burden on a traditional summary judgment motion. City of Killeen v.
Cheney, No. 03-18-00139-CV, 2018 Tex. App. LEXIS 9146, 2018 WL 5832088, at *3 (Tex.
App.—Austin Nov. 8, 2018, no pet.). "If the evidence creates a fact question regarding
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the jurisdictional issue, then the trial court cannot grant the plea to the jurisdiction."
Transformative Learning Sys., 572 S.W.3d at 286 (quoting Miranda, 133 S.W.3d at 227-28).
Even so, when the jurisdictional facts are undisputed, the trial court rules on the plea to
the jurisdiction as a matter of law, and on appeal, the trial court's ruling is reviewed de
novo. McMillan v. Aycock, No. 03-18-00278-CV, 2019 Tex. App. LEXIS 2624, 2019 WL
1461427, at *2 (Tex. App.—Austin Apr. 3, 2019, no pet.).
The appeals panel considered only a single issue in its determination, that being
whether Ladd's compensable injury from 2000 included and extended to his post-
laminectomy syndrome of the lumbar region, myalgia, and myositis. The declarations
now sought by Ladd go much further than this single issue and are substantially broader
in scope, even arguably beyond Ladd's particular case. Viewing the pleadings and the
evidence presented to the trial court on this issue, we find that the trial court did not err
in granting the plea to the jurisdiction filed by Ace because Ladd did not exhaust his
administrative remedies relating to the declaratory judgment prior to filing this
proceeding in the district court. We overrule issue one in Ladd's counter-appeal as to
Ace.
THE DWC AND THE COMMISSIONER'S PLEA TO THE JURISDICTION
We also review the question of sovereign immunity de novo. Harris County Hosp.
Dist. v. Tomball Reg'l Hosp., 283 S.W.3d 838, 842 (Tex. 2009). The Texas Supreme Court’s
decisions in City of El Paso v. Heinrich, 284 S.W.3d 366 (Tex. 2009) and Tex. Dep’t of Transp.
Ace Prop. & Cas. Ins. Co. v. Ladd Page 8
v. Sefzik, 355 S.W.3d 618 (Tex. 2011) (per curium) set forth the modern standard for
sovereign immunity in UDJA actions. State agencies “are immune from suits under the
Uniform Declaratory Judgment Act unless the Legislature has waived immunity for the
particular claims at issue.” Sefzik, 355 S.W.3d at 620. The Heinrich/Sefzik doctrine provides
just two strictly-limited exceptions to sovereign immunity: (1) a suit against an agency to
challenge the validity or constitutionality of a statute or (2) a suit alleging ultra vires acts
against the actual bad actor. Heinrich, 284 S.W.3d at 369-70; Sefzik, 355 S.W.3d at 620.
Ladd's pleadings do not seek a finding of unconstitutionality of any rule or statute.
Therefore, this exception does not apply.
Second, to whatever degree Ladd's pleadings could be construed to contain a
claim for ultra vires acts, Ladd has not met the standard for such a claim. “[T]he proper
defendant in an ultra vires action is the state official whose acts or omissions allegedly
trampled on the plaintiff’s rights.” Sefzik, 355 S.W.3d at 620 (citing Heinrich, 284 S.W.3d
at 372-73.). “To fall within this ultra vires exception, a suit must not complain of a
government officer’s exercise of discretion, but rather must allege, and ultimately prove,
that the officer acted without legal authority or failed to perform a purely ministerial act.”
Heinrich, 284 S.W.3d at 372. Ladd has not shown a “trampling” or failure to perform a
ministerial act by the DWC or by the Commissioner.
Therefore, we find that neither of the exceptions to sovereign immunity apply and
the trial court did not err by granting the DWC and the Commissioner's plea to the
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jurisdiction. We overrule Ladd's sole issue as to the DWC and the Commissioner.
ACE'S APPEAL
In its first issue, Ace complains that the trial court erred by granting Ladd's
traditional motion for summary judgment because it was granted on the same issue on
which the trial court granted Ace's plea to the jurisdiction, that being the failure to
exhaust Ladd's administrative remedies prior to filing this proceeding in the district
court. In its second issue, Ace complains that the trial court erred by denying its motion
for no-evidence summary judgment because Ladd presented no evidence that the injury
was a producing cause of his post-laminectomy syndrome of the lumbar region, myalgia,
and myositis. In its third issue, Ace complains that the trial court erroneously added
post-judgment interest to the judgment.
SUMMARY JUDGMENT
STANDARD OF REVIEW
The granting of a motion for summary judgment is reviewed de novo and if, as
here, the trial court does not specify the grounds for its ruling, a summary judgment must
be affirmed if any of the grounds on which judgment is sought are meritorious. Merriman
v. XTO Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013). When both parties move for a
summary judgment and the trial court grants one motion and denies the other, we review
all summary judgment evidence, determine all issues presented, and render the
judgment the trial court should have rendered. Id.Ace Prop. & Cas. Ins. Co. v. Ladd Page 10
To prevail on a traditional motion for summary judgment, the moving party must
show that no genuine issue of material fact exists and that it is entitled to judgment as a
matter of law. Tarr v. Timberwood Park Owners Ass'n, Inc., 556 S.W.3d 274, 278 (Tex. 2018).
When the movant who files the motion bears the burden of proof, it must show that it is
entitled to prevail on each element of its cause of action. Pelco Constr. Co. v. Chambers
Cnty., 495 S.W.3d 514, 520 (Tex. App.—Houston [1st Dist.] 2016, pet. denied). In
reviewing a traditional summary judgment motion, we must take as true all evidence
favorable to the non-movant and draw every reasonable inference and resolve all doubts
in favor of the non-movant. Zurita v. Lombana, 322 S.W.3d 463, 472 (Tex. App.—Houston
[14th Dist.] 2010, pet. denied).
Under Rule 166a(i) of the Rules of Civil Procedure, a no-evidence summary
judgment motion requires the non-moving party to present evidence raising a genuine
issue of material fact supporting each element contested in the motion. Timpte Indus., Inc.
v. Gish, 286 S.W.3d 306, 310 (Tex. 2009). In our review of a no-evidence summary
judgment, we review the evidence presented by the motion and response in the light
most favorable to the party against whom the judgment was rendered, crediting evidence
favorable to the non-moving party if a reasonable juror could and disregarding contrary
evidence unless a reasonable juror could not. Id.LADD'S TRADITIONAL MOTION FOR SUMMARY JUDGMENT
In the trial court, as the party appealing the decision of the appeals panel, Ladd
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had the burden of proof to establish that the finding by the appeals panel was erroneous
and that his compensable injury in 2000 should be extended to include the years'
subsequent post-laminectomy syndrome of the lumbar region, myalgia, and myositis.
TEX. LAB. CODE § 410.303. As such, he also had the burden in his traditional motion for
summary judgment to establish that the finding of the appeals panel was erroneous as a
matter of law. Ladd's motion for summary judgment alleged that Ace had waived any
complaint regarding post-laminectomy syndrome of the lumbar region, myalgia, and
myositis because it had paid the initial claim for the surgery, and therefore, Ace was liable
for any resulting injuries from the surgery. Ladd further argued that Ace had waited too
long to contest that the post-laminectomy syndrome of the lumbar region, myalgia, and
myositis were caused by the injury. In support of this contention, Ladd attached excerpts
of various medical providers from before and after the surgery, including the report
made by a physician when Ladd reached MMI in October of 2001, excerpts of a deposition
of Ace's medical expert in this proceeding, excerpts from the contested case hearing, and
the opinion containing the findings of the hearing officer.
Ace argues that, just like his claims for declaratory relief, Ladd failed to raise his
waiver claims before the hearing officer, and therefore, cannot raise them for the first time
in the district court. Ladd did not address whether or not these claims were made before
the hearing officer in his briefing to this Court.
As stated above, Section 410.302(b) of the Labor Code provides that judicial review
Ace Prop. & Cas. Ins. Co. v. Ladd Page 12
of an appeals panel decision is limited to issues decided by the appeals panel. TEX. LAB.
CODE § 410.302(b). Because of this, issues such as Ladd's complaints that were not raised
before an appeals panel may not be reviewed at trial in district court. See Hefley v. Sentry
Ins. Co., 131 S.W.3d 63, 65 (Tex. App.—San Antonio 2003, pet. denied). In order to prevail
on his motion for summary judgment, Ladd was required to establish as a matter of law
that he presented his issues during the administrative proceeding to the hearing officer.
In his summary judgment evidence attached to his motion, Ladd did not include the
entire transcript of the contested case hearing upon which the decision was based. The
portion of the record Ladd did include, especially the opinion and decision of the hearing
officer, does not reflect that Ladd's waiver contentions he makes to this Court were part
of the sole issue considered by the hearing officer and the appeals panel. We find that
the trial court erred by granting Ladd's traditional motion for summary judgment based
on defenses not presented during the administrative proceeding because it was not
proper for the trial court to consider them. We find that Ladd did not establish as a matter
of law that he was entitled to summary judgment on the grounds he alleged and the trial
court erred by granting Ladd's traditional motion for summary judgment. We sustain
Ace's first issue.
ACE'S NO-EVIDENCE MOTION FOR SUMMARY JUDGMENT
In its second issue, Ace complains that the trial court erred by denying its no-
evidence motion for summary judgment because Ladd presented no evidence that the
Ace Prop. & Cas. Ins. Co. v. Ladd Page 13
2000 injury was a producing cause of his post-laminectomy syndrome of the lumbar
region, myalgia, and myositis. To defeat the no-evidence motion for summary judgment,
Ladd was not required to marshal his proof; his response only needed to point out
evidence that raises a fact issue on the challenged element, causation. TEX. R. CIV. P.
166a(i) cmt.; Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 207 (Tex. 2002). The trial
court's decision on a no-evidence motion for summary judgment is based on written
pleadings and written evidence. See TEX. R. CIV. P. 166a(c).
Ladd incorporated his evidence attached to his motion for summary judgment in
his response to Ace's motion for summary judgment, which included evidence that Ladd
had been seen by various providers over the years, specifically in 2006 and 2010, for
treatment for pain in his back and lower legs which he attributed to his work injury in
February of 2000 and the laminectomy that was conducted thereafter. Records were
included indicating that the laminectomy was performed due to Ladd's work injury. The
deposition taken of Ace's expert in anticipation of trial included statements that any post-
laminectomy syndrome would only be caused by the laminectomy.
We find that, when viewed in the light most favorable to Ladd, the evidence
presented by Ladd was sufficient to raise a fact issue on the issue of causation. Whether
it is otherwise sufficient is not a question for us to answer at this juncture. Therefore, we
find that the trial court did not err by denying Ace's motion for no-evidence summary
judgment. We overrule Ace's second issue.
Ace Prop. & Cas. Ins. Co. v. Ladd Page 14
POST-JUDGMENT INTEREST
In its third issue, Ace complains that the trial court erred by awarding post-
judgment interest. However, because we have sustained Ace's first issue and are
reversing the judgment for a trial as to the judicial review, the award of post-judgment
interest is also set aside and to be considered in the further proceedings and we do not
need to address this issue further at this stage of the proceedings.
CONCLUSION
We have found that the trial court did not err by granting the pleas to the
jurisdiction of the DWC, the Commissioner, and Ace; therefore, that part of the trial
court's judgment is affirmed. We have further found that the trial court did not err by
denying Ace's no-evidence motion for summary judgment. Additionally, we have found
that the trial court erred by granting Ladd's traditional motion for summary judgment.
Accordingly, the trial court's judgment as to the judicial review of the appeals panel's
decision and all related issues, including the award of post-judgment interest, is reversed
and remanded for a trial.
JEFF ROSE1
Former Chief Justice
1
The Honorable Jeff Rose, Former Chief Justice of the Third Court of Appeals, sitting by assignment of the
Chief Justice of the Texas Supreme Court. See TEX. GOV'T CODE §§ 74.003, 75.002, 75.003.
Ace Prop. & Cas. Ins. Co. v. Ladd Page 15
Before Justice Johnson,
Justice Smith, and
Justice Rose
Affirmed in part; Reversed and remanded in part
Opinion delivered and filed November 22, 2022
[CV06]
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