Claimant’s Failure to Exhaust is Fatal to Suit Against Carrier

The San Antonio Court of Appeals has vacated a trial court’s order for the payment of income benefits and sanctions because the court concluded that the trial court lacked subject matter jurisdiction over the parties’ dispute.

In Texas Mutual Ins. Co. v. Vasquez (No. 04-14-00295-CV), the claimant maintained that she remained entitled to benefits under the workers’ compensation act even after she had recovered a settlement in a third-party case. The trial court agreed and signed an order requiring the carrier to continue to pay weekly income benefits. The court also ordered the carrier to pay $2,000.00 to Vasquez’s attorney “as a sanction for [its] bad faith.”

The carrier challenged the trial court’s jurisdiction to enter either order. The Court of Appeals agreed with the carrier, concluding that the trial court lacked jurisdiction to issue the orders because there was no evidence that the claimant had exhausted his administrative remedies before seeking judicial review in the trial court. The Court of Appeals wrote:

In [Tex. Mut. Ins. Co. v. Ruttiger, 381 S.W.3d 430 (Tex. 2012)], the workers’ compensation carrier asserted that the trial court lacked jurisdiction over a worker’s claim-handling suit because the DWC had not made a determination that the worker was entitled to the specific benefits that were denied or delayed. Id. at 436. The Texas Supreme Court disagreed, explaining that the worker had exhausted his administrative remedies as to his claims that the carrier had delayed in paying income benefits. Id. at 437. In Ruttiger, the parties had entered into a benefit dispute agreement which included the specific dates for which income benefits were payable, and this agreement was approved by the Commission. Id. In light of the worker’s exhaustion of administrative remedies, the Texas Supreme Court concluded that the trial court had jurisdiction over the worker’s claims for delayed payment of income benefits. Id. Here, by contrast, there was no evidence of a determination by DWC that income benefits were due. Nor was there any evidence that Vasquez had entered into a benefit review agreement or, for that matter, participated in any of the steps in the administrative dispute resolution process established by the Act. Thus, we conclude that Vasquez failed to exhaust his administrative remedies before seeking judicial review in the trial court.

For these reasons, we conclude the trial court erred in denying the plea to the jurisdiction. We grant Texas Mutual’s plea to the jurisdiction and dismiss Vasquez’s claims against Texas Mutual. Furthermore, because the trial court had no jurisdiction over the parties’ dispute, we vacate the trial court’s order directing Texas Mutual to pay workers’ compensation benefits and sanctions.