Self-Employed Claimant Could Not Pursue Bad Faith Claims as the Employer
A self-employed claimant may not appeal from a Division decision regarding benefits as the employer or pursue bad faith claims against the carrier as the claimant, according to a new decision for the Austin Court of Appeals. The court concluded that the employer was not a proper party to a suit for judicial review, affirmed the dismissal of the bad faith claims, and concluded that the carrier had defended the Division’s decision on benefits as a matter of law.
The court, in Childress v Texas Mutual Insurance Co. 03-19-00284-CV (August 27, 2020), affirmed a decision granting summary judgment in favor of the carrier over the claimant, Childress. The claimant’s objections asserted that the trial court erred in refusing to admit certain documents into the record; in not allowing the employer (ACE Fab) to proceed as a party or bringing its claims for breach of contract or statutory violations; not addressing his claims for breach of contract and statutory violations; and in affirming the Appeals Panel’s decision, contending that the Decision and Order “is clearly against the great weight and preponderance of the evidence.”
The appeal stemmed from a dispute that originated from the mandatory dispute resolution process for a workers’ compensation case that began in September 2017. The issues of the original dispute arose between Childress and the carrier, Texas Mutual Insurance Company, concerning the extent of his injury, maximum medical improvement, his impairment rating for a compensable injury, and disability. Following the usual claim progression through the Division’s process, the case went to a Contested Case Hearing, and the Administrative Law Judge decided the case on all issues. The ALJ determined:
The May 2, 2015, compensable injury does not extend to and include a right shoulder full thickness tear of the distal supraspinatus tendon. Claimant reached maximum medical improvement on June 22, 2016. Claimant’s impairment rating is 1%. Claimant had disability beginning on July 25, 2016, and continuing through September 2, 2016, but not from September 2, 2016, continuing through September 27, 2017, the date of the contested case hearing.
Childress, unhappy with the result, appealed the decision, and the DWC appeals panel affirmed the ALJ’s decision.
Still unsatisfied with the decision of his case, Childress filed his case with the District Court.
In his first amended petition, he stated that he was bringing the suit in his own name and “d/b/a ACE Fab party to this proceeding . . . as Employer, Employee and Claimant.” He argued that his supraspinatus tear should be considered part of his compensable injury and that he had not reached MMI; contested the 1% IR; sought disability from June 22, 2016; and asserted claims for breach of contract, negligence, bad faith, and statutory violations.
Texas Mutual filed special exceptions, arguing that ACE Fab was not a party to the administrative proceeding, was not aggrieved by the Appeals Panel’s decision, and had not exhausted its administrative remedies, and asking the trial court to therefore strike ACE Fab’s claims. It also excepted to Childress’s statement that he was seeking to appeal “all portions of the judgment,” arguing that he was limited to challenging the findings and conclusions he contested before the Appeals Panel.
After a hearing on Texas Mutual’s special exceptions, Childress again amended his petition, dropping ACE Fab as a claimant and asserting that Texas Mutual was liable for negligence for violations of the insurance code and the administrative code. He further argued that Texas Mutual had waived its right to specially object to ACE Fab as a party and stated that his pleadings “will reference Alvy Childress d/b/a ACE Fab only for substance rights to argument and credibility.”
In January 2019, Texas Mutual filed a motion for summary judgment, arguing first that Childress had not stated a claim on which relief can be granted because his amended petition only leveled claims for negligence and violations of various statutes and rules, rather than seeking judicial review of the appeals panel’s final decision. Texas Mutual further contended that it was entitled to dismissal of “all claims brought by or on behalf of the employer, ACE Fab,” because it was not a party to the administrative proceeding, noting that Childress is “both the employer and the injured employee, but the issues before the Appeals Panel pertain only to the employee.” Texas Mutual argued in the alternative that “to the extent [Childress’s] lawsuit seeks judicial review of the final decision” of the Appeals Panel, Texas Mutual was entitled to dismissal of Childress’s claims for negligence and statutory violations because Childress’s suit for judicial review is limited to the issues before the Appeals Panel. It also argued that Childress’s claims for damages beyond workers’ compensation benefits were barred by section 408.001 of the Labor Code. Finally, Texas Mutual asserted a no-evidence motion arguing that Childress could not present evidence: that his supraspinatus tear is compensable; that his MMI was not June 22, 2016, or that his IR is something other than 1%; that Dr. Clark’s certification was contrary to the evidence; or that Childress had a disability sometime after September 2, 2016
When considering the argument that the court erred in not allowing the employer, ACE Fab, to proceed as a party or bringing its claims for breach of contract or statutory violations, the Court of Appeals reasoned that ACE Fab could not be a party to the case because while they may want to pursue a non-benefits-related claim, the proceeding they were trying to join was addressing a suit for judicial review and was limited to issues decided by the Appeals Panel. Furthermore, the proceeding decided issues of which ACE Fab was not aggrieved—disability, MMI, IR, and compensability of Childress’ injuries. The Court maintained that the trial court did not err by disallowing ACE Fab as a party as ACE Fab’s claims were those against its insurance carrier for breach of contract and statutory violations. They overruled Childress’ claims related to ACE Fab as a party.
When considering the arguments concerning the extent of injury, disability, and MMI/IR issues, the Court considered whether Texas Mutual proved to be entitled to a summary judgment affirming the Appeals Panel’s order. The issues before the trial court were:
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- whether Childress’s supraspinatus tear was part of his compensable injury;
- whether he had reached MMI and, if so, when;
- if he had reached MMI, his IR;
- whether he had disability after September 2, 2016;
- and if Texas Mutual’s no-evidence motion required Childress to put on evidence to rebut the Appeals Panel’s decision on the other issues.
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Childress attached more than 300 pages of documents—including doctors’ reports, ACE Fab’s sales tax permit, Texas Mutual’s quote for ACE Fab’s workers’ compensation insurance, etc. – to his response. There he argued:
The great weight and substantial medical records, Plaintiff inserts [sic] the four doctors is by all standards have established the burden of proof and should have presumptive weight. Plaintiff asserts this fact has great weight and is controlling. [Texas Mutual’s] argument is plainly erroneous and is inconsistent with the facts. The preponderance of the other medical evidence herein is to the contrary. The court should take judicial notice of such pleadings attached with attached evidence herein.
As to the issues of MMI and IR, Childress stated:
The claimant received improper and inadequate treatment leading to a under diagnosed and under documented bicep’s injury, and shoulder torn tendon. Critical evidence and the factual sufficiency of the evidence presented in relation to; Impairment, MMI. The preponderance of the other medical evidence herein is to the contrary. See Cease and Desist attached herein. This court should take judicial notice of such pleadings attached with attached evidence herein.
Finally, as to the issue of disability, Childress pointed to a Designated Doctor Report from Dr. Daniel Lerma that he argued should be given “presumptive weight” and “dispute” the ALJ’s finding as to the issue of disability.
The Court agreed with the lower court that an actual fact issue must be determined without the volume of the evidence offered being considered as a factor. Since Childress failed to show or support a genuine issue of material fact, the Court found that Childress did not meet his burden, and the trial court did not err in granting Texas Mutual’s motion for no-evidence summary judgment.
Having overruled Childress’ arguments on appeal, the Court affirmed the trial court’s order granting Texas Mutual’s motion for summary judgment.
FOLIO
