El Paso Court Orders Dismissal of Bad Faith Claim
The latest, and perhaps the final bad faith claim involving comp is In re Texas Mutual Insurance Co., No. 08-15-00343-CV (Ct App—El Paso, March 10, 2016.)
The court of appeals held that claimant’s allegation that the carrier had misrepresented its right of subrogation based on the argument that the carrier had waived its subrogation rights through an “Alternate Employer Endorsement” is a cause of action or claim which arises from the investigation, handing, or settlement of a workers’ compensation claim. Accordingly, the DWC has exclusive jurisdiction over the allegation. The trial court erred in refusing to dismiss this “misrepresentation of coverage” bad faith claim.
The trial court next concluded that Texas Mutual is “estopped” from raising its jurisdictional challenge because it intervened in the suit to assert a subrogation interest. In effect, the trial court ruled that Texas Mutual, by filing its petition in intervention, waived its right to complain that the DWC has exclusive jurisdiction of the plaintiffs’ claims. This conclusion runs afoul of the well-established rule that subject matter jurisdiction cannot be waived or conferred by agreement. See Rusk State Hosp. v. Black, 392 S.W.3d 88, 103 (Tex. 2012). The doctrine of estoppel cannot create subject matter jurisdiction where it does not exist. See In re Crawford, 458 S.W.3d at 928 n.7 (rejecting argument that the carrier waived or was estopped from asserting that the Act barred the malicious prosecution cause of action because subject matter jurisdiction cannot be waived or created where it does not exist).
Finally, the trial court determined that the Workers’ Compensation Act does not afford a private remedy to the plaintiff in the event that Texas Mutual’s subrogation claims fail in whole or in part. The issue is not whether the Act affords a “private remedy” but whether a particular claim arises from the investigation, handling, or settling of a claim for benefits. Crawford makes clear that the DWC’s exclusive jurisdiction extends to a claim that a carrier misrepresented an insurance policy when the alleged misrepresentation occurs within the claims-settlement context. In re Crawford, 485 S.W.3d at 927. As the Supreme Court observed in Crawford, “[t]he 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.” In re Crawford, 458 S.W.3d at 927. Plaintiffs’ claim that Texas Mutual misrepresented the policy as it pertains to its right of subrogation is barred by the Act because the claim is necessarily based on Texas Mutual’s investigation, handling, or settling of the benefit claims. See In re Crawford, 458 S.W.3d at 926- 27 (holding that the DWC has exclusive jurisdiction over a claim for misrepresentation of an insurance policy when the misrepresentation occurs within the claim-settlement process; also holding that the plaintiffs’ claims for malicious prosecution and intentional infliction of emotional distress arose out of the carrier’s investigation, handling, and settling of a workers’ compensation claim); Ruttiger, 381 S.W.3d at 443-45 (holding that the Act barred the plaintiffs’ claims for violation of Sections 541.060 and 542.003 because those claims are necessarily based on the investigation and settlement of benefit claims). The trial court abused its discretion by not dismissing the misrepresentation claim.
FOLIO
