Corby W. Stevenson v. Texas Mutual Insurance Company

Affirmed and Opinion Filed May 13, 2022
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-21-00464-CV
CORBY W. STEVENSON, Appellant
V.
TEXAS MUTUAL INSURANCE COMPANY, Appellee
On Appeal from the 354th Judicial District Court
Hunt County, Texas
Trial Court Cause No. 82551
MEMORANDUM OPINION
Before Justices Myers, Osborne, and Nowell
Opinion by Justice Nowell
Corby W. Stevenson appeals the trial court’s order denying his motion to
apportion settlement proceeds and granting Texas Mutual Insurance Company’s
cross-motion for apportionment. In a single issue, Stevenson argues the trial court
failed to properly apportion settlement proceeds pursuant to the Texas Labor Code.
We reverse the trial court’s order in part and remand for the trial court to calculate
Texas Mutual’s proportionate share of expenses.
FACTUAL BACKGROUND
Stevenson suffered a workplace injury in June 2013, which was exacerbated
by negligent medical treatment he received on December 23, 2013. Texas Mutual,
the workers’ compensation carrier for Stevenson’s employer, paid workers’
compensation benefits to and on behalf of Stevenson for his injuries. In January
2015, Stevenson sued his health care providers for negligence.
On April 29, 2016, Texas Mutual sent a letter to Stevenson’s counsel stating:
Texas Mutual Insurance Company is the workers’ compensation
carrier for Corby Stevenson’s 06/30/2013 accident. Our investigation
reveals that your client may be pursuing a claim for damages against
the liable third party or parties.
Because of the accident, to date we have paid $253,665.95 in
workers’ compensation benefits to and on behalf of your client. This
amount, which is our subrogation lien, may continue to increase.
Chapter 417 of the Texas Labor Code gives us a statutory subrogation
right to step in the shoes of your client to obtain reimbursement of the
benefits we have paid. This letter is notice of our subrogation lien and
intent to subrogate.
In case of settlement or judgment, we have a legal right to receive
reimbursement before your client receives any money.
On December 29, 2016, Texas Mutual sent another letter to Stevenson’s counsel
stating:
To date, Texas Mutual Insurance Company (Texas Mutual) has
paid $307,546.67 on behalf of Corby Stevenson. Attached is an
itemized abstract detailing the medical and indemnity paid to date. The
total amount of the workers’ compensation lien from June 30, 2013
through December 23, 2013 is $27,519.40.
Our lien is not final. Please contact me before settlement for an
updated lien amount.
Texas Mutual sent similar letters to Stevenson’s counsel on July 21, 2017, stating
Texas Mutual had paid $318,092.46 on Stevenson’s behalf to date and again on
January 22, 2018 stating it had paid $318,551.33 to date. Each letter advised that the
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total amount of the workers’ compensation lien from June 30, 2013 through
December 23, 2013 was $27,519.40.
Stevenson settled his medical negligence case on January 25, 2018, for
$270,000.
On February 1, 2018, Texas Mutual sent another letter to Stevenson’s counsel
stating:
In my previous correspondence with you, I indicated the total amount
we had paid on the claim and also indicated the amounts paid prior to
the cast being applied too tightly on December 23, 2013, which was the
basis of the lawsuit you filed on behalf of Mr. Stevenson. My letters
stated very clearly that the $27,519.40 was what we paid from the date
of the original injury until December 23, 2013, which was the period
before the cast was applied too tightly. As of today, the total paid is
$318,551.33 less $27,519.40 = $291,031.93 which is the amount of our
lien attributable to the medical malpractice.
Texas Mutual then filed its original petition in intervention to recover its
“subrogation lien for medical and indemnity benefits of $318,551.33 paid to and on
behalf of” Stevenson. In response, Stevenson filed a motion for apportionment and
requested the trial court limit Texas Mutual’s recovery to $27,519.40 before
deductions for attorney’s fees and expenses. Texas Mutual responded with its own
motion for apportionment in which it proposed the apportionment of settlement
funds could be proper pursuant to labor code section 417.003(a), which would
reduce its recovery to pay attorney’s fees and expenses to Stevenson’s counsel.
Following a hearing, the trial court entered an order denying Stevenson’s
motion for apportionment and granting Texas Mutual’s cross-motion for
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apportionment. The trial court found: Texas Mutual’s subrogation interest is
$291,031.93; Texas Mutual is entitled to first-money recovery of its subrogation
interest from Stevenson’s medical malpractice settlement; Texas Mutual’s
subrogation interest exceeds the value of the medical malpractice settlement; Texas
Mutual is entitled to recover $270,000 to satisfy its subrogation interest; and
Stevenson’s counsel is entitled to receive no more than one-third of Texas Mutual’s
subrogation recovery in attorney’s fees. Therefore, the trial court found: “Pursuant
to Texas Labor Code 417.003(c), Intervenor Texas Mutual Insurance Company’s
subrogation recovery out of the $270,000 settlement is: $270,000 less a maximum
attorney fee of $90,000 = $180,000.” The trial court ordered Stevenson’s counsel to
pay $180,000 from the settlement funds to Texas Mutual. This appeal followed.
LAW & ANALYSIS
In a single issue on appeal, Stevenson argues the trial court failed to properly
apportion the settlement proceeds and also requests that Texas Mutual’s recovery be
limited to no more than $27,519.40.
An employee may seek damages from a third party who is liable for an injury
that is compensable under the labor code. See TEX. LAB. CODE ANN. § 417.001(a).
When a benefit is claimed by an injured employee, the insurance carrier is
subrogated to the rights of the injured employee. See id. § 417.001(b).
The Texas Supreme Court has repeatedly stated that an insurance carrier is
entitled to recover all benefits paid to an injured worker out of the “first money” the
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worker recovers from a liable third party. See Exxon Mobile Corp. v. Ins. Co. of Am.,
568 S.W.3d 650, 651 (Tex. 2019) (citing TEX. LAB. CODE ANN. §§ 417.001–.002).
Considering sections 417.001 and 417.002 of the labor code, the supreme court
recently reiterated that the insurance carrier has the right to “the first money a worker
receives from a tortfeasor,” and “the employee has no right to any sums recovered
from a third party until the carrier is reimbursed in full.” Id. at 655-56 (internal
quotation marks and footnotes omitted); see also Tex. Mut. Ins. Co. v. Ledbetter, 251
S.W.3d 31, 35 (Tex. 2008) (“carrier gets the first money a worker receives from a
tortfeasor”); Argonaut Ins. Co. v. Baker, 87 S.W.3d 526, 530 (Tex. 2002) (“For
decades, the law has been that, under the Workers’ Compensation Act’s subrogation
provision, the first money paid [to] or recovered by the employee, or his
representatives, belongs to the compensation carrier paying the compensation, and
until it is paid in full, the employee, or his representatives, have no right to any
funds.”); Harris County, Tex. v. Knapp, 496 S.W.3d 871, 880 (Tex. App.—Houston
[1st Dist.] 2016, pet. denied).
Applying the Texas Supreme Court’s authority, Texas Mutual is entitled to
the first money Stevenson recovered in the medical malpractice action, and until
Texas Mutual is paid in full, Stevenson has no right to the settlement money. In this
case, the settlement amount ($270,000.00) does not exceed the amount of Texas
Mutual’s subrogation interest as determined by the trial court ($291,031.93).
Accordingly, as discussed below, Texas Mutual is entitled to the full amount of the
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settlement minus payment of attorney’s fees and expenses that Texas Mutual must
pay to Stevenson’s counsel pursuant to section 417.003(a).1
Section 417.003(a) provides:
An insurance carrier whose interest is not actively represented by an
attorney in a third-party action shall pay a fee to an attorney
representing the claimant in the amount agreed on between the attorney
and the insurance carrier. In the absence of an agreement, the court shall
award to the attorney payable out of the insurance carrier’s recovery:
(1) a reasonable fee for recovery of the insurance carrier’s
interest that may not exceed one-third of the insurance
carrier’s recovery; and
(2) a proportionate share of expenses.
TEX. LAB. CODE ANN. § 417.003(a). The parties agree that Texas Mutual’s interest
was not actively represented by an attorney in the medical malpractice action, and
the record does not reflect that Texas Mutual and Stevenson’s attorney agreed on a
fee. Accordingly, Texas Mutual must pay a reasonable fee to Stevenson’s attorney
and a proportionate share of expenses. See id.
1
Rather than apply section 417.003(a), the trial court erroneously applied section 417.003(c). Section
417.003(c) applies when “an attorney actively representing the insurance carrier’s interest actively
participates in obtaining a recovery.” TEX. LAB. CODE. ANN. § 417.003(c). It is undisputed in this case that
Texas Mutual did not participate in obtaining the medical malpractice settlement. Therefore, the trial court
erred by applying subsection (c). See Morales v. Michelin N. Am., Inc., 351 S.W.3d 120, 122–23 (Tex.
App.—San Antonio 2011, no pet.) (“Because Texas Mutual was not actively represented in Morales’s
claims against the defendants he alleged were responsible for his injuries, section 417.003(a) is the
applicable provision, and the trial court erred when it applied section 417.003(c) and failed to reduce Texas
Mutual’s first money payment by the amount of its proportionate share of expenses.”).
Texas Mutual asserts the trial court could apply section 417.003(c) because Stevenson sought
apportionment pursuant to that provision. However, the trial court denied Stevenson’s motion and granted
Texas Mutual’s cross-motion for apportionment. Accordingly, the grounds on which Stevenson moved for
apportionment are not at issue in this appeal; the grounds on which Texas Mutual moved are at issue, and
Texas Mutual proposed a division pursuant to section 417.003(a). To the extent Texas Mutual argues the
trial court could rely on Stevenson’s representations that section 417.003(c) was the proper provision under
which to determine recovery of attorney’s fees and expenses, we consider this argument unavailing.
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Stevenson’s counsel was entitled to recover a reasonable fee not to exceed
one-third of Texas Mutual’s recovery. See id. § 417.003(a)(1). The trial court
awarded Stevenson’s counsel a fee equal to one-third of Texas Mutual’s recovery
($90,000).2 We conclude this fee award was not in error. However, subsection (a)(2)
requires that Texas Mutual also must pay a proportionate share of expenses from its
recovery. See id. § 417.003(a)(2). The trial court erred when it failed to order Texas
Mutual to do so.
Stevenson also argues that Texas Mutual is estopped from seeking to recover
more than $27,519.40 of the settlement proceeds. Stevenson asserts that Texas
Mutual consistently represented the amount of its subrogation lien to be $27,519.40,
and “the settlement that was reached with the healthcare providers was based on that
amount. Only after the case was settled did [Texas Mutual] come back, demanding
subrogation well in excess of even the amount of the settlement.” We disagree.
Quasi-estoppel precludes a party from asserting, to another’s disadvantage, a
right inconsistent with a position previously taken. Lopez v. Munoz, Hockema &
Reed, L.L.P., 22 S.W.3d 857, 864 (Tex. 2000); Jamison v. Allen, 377 S.W.3d 819,
823 (Tex. App.—Dallas 2012, no pet.). The principle applies when a party
knowingly acts or conducts himself in a particular manner and then takes a position
inconsistent with that act or conduct. Jamison, 377 S.W.3d at 823.
2
While reaching the correct result, the trial court incorrectly awarded the fees pursuant subsection (c)
rather than pursuant to section 417.003(a)(1).
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Texas Mutual’s written correspondence to Stevenson’s counsel consistently
stated the total amount of the workers’ compensation lien from June 30, 2013
through December 23, 2013 was $27,519.40. Texas Mutual’s correspondence also
consistently provided the total amount in workers’ compensation benefits that Texas
Mutual had paid to and on Stevenson’s behalf; that amount was never less than
$253,665.95, and each of the letters confirmed the lien was not final.
The undisputed facts show that the original workplace injury to Stevenson
occurred on June 30, 2013, and the incidence of medical malpractice that
exacerbated the injury occurred on December 23, 2013. Accordingly, Texas
Mutual’s representation that “the total amount of the workers’ compensation lien
from June 30, 2013 through December 23, 2013 is $27,519.40” only applied to the
portion of the workers’ compensation that Texas Mutual paid before the medical
malpractice event exacerbated the injury. Texas Mutual’s correspondence in no way
indicated that $27,519.40 was the total amount of its subrogation interest. Rather,
Texas Mutual consistently stated its subrogation interest exceeded $253,665.95 and
was not final.
We conclude that, in seeking to recover the full amount of its subrogation
interest, Texas Mutual did not assert a right inconsistent with a position previously
taken and the trial court did not err by refusing to limit Texas Mutual’s recovery to
$27,519.40 as Stevenson requested.
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CONCLUSION
The trial court’s order denying Stevenson’s motion for apportionment and
granting Texas Mutual’s cross motion for apportionment is reversed in part. We
reverse the trial court’s order insofar as it incorrectly relies on Texas Labor Code
section 417.003(c). We remand this case to the trial court to award a proportionate
share of expenses payable to Stevenson’s counsel from Texas Mutual’s recovery
pursuant to Texas Labor Code section 417.003(a). In all other respects, the trial
court’s order denying Stevenson’s motion for apportionment and granting Texas
Mutual’s cross motion for apportionment is affirmed.
210464f.p05 /Erin A. Nowell//
ERIN A. NOWELL
JUSTICE
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Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
CORBY W. STEVENSON, On Appeal from the 354th Judicial
Appellant District Court, Hunt County, Texas
Trial Court Cause No. 82551.
No. 05-21-00464-CV V. Opinion delivered by Justice Nowell.
Justices Myers and Osborne
TEXAS MUTUAL INSURANCE participating.
COMPANY, Appellee
In accordance with this Court’s opinion of this date, the trial court’s order
denying Stevenson’s motion for apportionment and grating Texas Mutual’s cross
motion for apportionment is reversed in part. We reverse the trial court’s order
insofar as it incorrectly relies on Texas Labor Code section 417.003(c). We remand
this case to the trial court to award a proportionate share of expenses payable to
Stevenson’s counsel from Texas Mutual’s recovery pursuant to Texas Labor Code
section 417.003(a). In all other respects, the trial court’s order denying Stevenson’s
motion for apportionment and granting Texas Mutual’s cross motion for
apportionment is affirmed.
It is ORDERED that each party bear its own costs of this appeal.
Judgment entered this 13th day of May, 2022.
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