Court of Appeals of Texas, El Paso.

Alfonso OROZCO, Appellant,

v.

OLD REPUBLIC INSURANCE CO., Appellee.

No. 08-99-00409-CV.

|

Aug. 17, 2000.

OPINION

McCLURE

*1 This is a workers’ compensation case. Alfonso Orozco (“Orozco”), appearing pro se, appeals from an order granting summary judgment in favor of Old Republic Insurance Company (“Old Republic”). Orozco brought suit against the insurer alleging it breached its duty of good faith and fair dealing by denying payment for certain medical treatments and prescriptions. Old Republic moved for both traditional and no-evidence summary judgments, asserting it had not breached the duty of good faith and fair dealing because all of its actions were taken in compliance with the orders issued by the Texas Workers’ Compensation Commission (“TWCC”). The trial court granted the motion without specifying the grounds for its decision. Having found no error, we affirm.

SUMMARY OF THE EVIDENCE

We have become somewhat familiar with the history of Orozco’s case. On two separate occasions, he has exhausted his TWCC administrative remedies and sought review in this Court. He also has been involved in two other lawsuits arising out of his compensable work-related injury. Although we have told part of this story before,¹ we again summarize the basic procedural history of this long and complex sequence of litigation.

The Underlying Injury

On November 5, 1991, Orozco sustained a work-related injury to his lower back. At the time of his injury, Orozco was working for American Smelting and Refining Company (“ASARCO”). Old Republic was ASARCO’s workers’ compensation insurance carrier. During the course of Orozco’s recovery, a dispute arose between his treating physician and ASARCO’s physician regarding his impairment rating and his date of maximum medical improvement.

The TWCC appointed Dr. Marco Ochoa as a “designated doctor” to resolve the dispute. On November 9, 1992, Dr. Ochoa determined Orozco had reached maximum medical improvement with a 12 percent impairment rating. Under the Texas Workers’ Compensation Act, an injured worker is not entitled to supplemental income benefits unless, at the expiration of his impairment income benefit eligibility period, he has an impairment rating of 15 percent or more. See Tex.Lab.Code Ann. § 408.142(a)(1)(Vernon 1996). Orozco disagreed with Dr. Ochoa’s findings and sought to overcome the presumptive weight given the designated doctor’s report. See Tex.Lab.Code Ann. § 408.125 (Vernon 1996).

The First Round of TWCC Hearings

As he has throughout most of the underlying litigation, Orozco represented himself during the first round of administrative hearings. He was unsuccessful in challenging the presumptive weight given Dr. Ochoa’s report at a benefit review conference, and later at a contested case hearing. The contested case hearing officer determined Dr. Ochoa’s opinion was not contrary to the great weight of the other medical evidence and, thus, upheld the doctor’s findings. The hearing officer’s decision was affirmed by the TWCC appeals panel in decision number 93539, decided August 12, 1993.

Cause Number 93-10101

*2 Orozco challenged the TWCC appeals panel’s decision by filing suit in the 346th District Court. The trial court dismissed the suit for lack of subject matter jurisdiction because Orozco failed to timely serve his original petition on the TWCC. Orozco appealed the trial court’s decision and we reversed and remanded. See Orozco v. Old Republic Ins. Co., No. 08-98-00159-CV (Tex.App.-El Paso June 17, 1999)(holding timely service of suit, on the TWCC, is mandatory but not jurisdictional). After remand, the case was transferred to, and is still pending in, County Court at Law Number Five.²

The Second Round of TWCC Hearings

While cause number 93-10101 was pending in the 346th District Court, Orozco requested and was granted a second benefit review conference. At the conference, Mr. Orozco argued that the first round of hearings was limited solely to his lower back injury and did not address his neck injury and its related symptoms. The benefit review officer concluded that the TWCC lacked jurisdiction to hear the issues raised because they had already been addressed in the first round of administrative hearings, and were on appeal in cause number 93-10101.

Orozco appealed the benefit review officer’s determination. In his second contested case hearing, Orozco asserted: (1) that the TWCC had jurisdiction to address his complaints; (2) that his impairment rating should be increased due to his neck injury; and (3) that he was entitled to lifetime income benefits. See Tex .Lab.Code Ann. § 408.161(a)(Vernon 1996). The hearing officer disagreed, concluding that the TWCC lacked jurisdiction; that Orozco’s compensable injury did not include his asserted neck injury; and that he was not entitled to lifetime income benefits. Orozco appealed. The TWCC appeals panel affirmed the hearing officer’s opinion in decision number 951111. In its decision, the panel concluded the principles of res judicata also barred relitigation of the issues determined in the prior administrative proceedings.

Cause Number 95-11372

Orozco appealed the panel’s decision to the 171st District Court, cause number 95-11372. Old Republic filed two motions for summary judgment. The first motion asserted there was no evidence establishing Orozco’s right to lifetime income benefits; the second motion argued res judicata barred Orozco’s claims. The trial court granted the motions, and Orozco appealed. We affirmed the trial court’s decision. See Orozco v. Old Republic Ins. Co., 08-99-00065-CV (Tex.App.-El Paso June 29, 2000, no pet. h.)(not designated for publication).

Cause Number 95-2299

In addition to pursuing workers’ compensation benefits, Orozco was lead plaintiff in a suit by twenty-six workers against the seven doctors appointed by the TWCC to determine the respective workers’ impairment ratings. The plaintiff workers alleged the doctors violated their rights under the Texas Workers’ Compensation Act and breached the duty of good faith and fair dealing. The trial court granted summary judgment in favor of the doctors. We later affirmed in an unpublished opinion styled Orozco v. Arat, No. 08-96-00449-CV.

The Present Lawsuit

*3 On July 6, 1998, Orozco filed a petition alleging Old Republic breached its duty of good faith and fair dealing in connection with its handling of his workers’ compensation claim. Specifically, Orozco alleged that Old Republic breached the duty because:

• it was aware that Dr. Ochoa used the wrong medical guides to calculate his impairment rating;

• it knowingly and intentionally gave him an impairment rating under 15 percent;

• it acted in collusion with the TWCC to use the wrong medical guides; and

• it acted in collusion with the TWCC to give him an impairment rating under 15 percent.

On January 13, 1999, Old Republic moved for both traditional and no-evidence summary judgments. Under the traditional standard, Old Republic asserted its actions in handling Orozco’s claim were done in compliance with orders issued by the TWCC and, thus, no claim of bad faith could be brought against it. Under the no evidence standard, Old Republic alleged Orozco failed to produce any evidence establishing bad faith by Old Republic. Orozco filed two responses listing and attaching numerous documents illustrating the history of his dispute with Dr. Ochoa and the TWCC, and his attempts to overturn their decisions.. The trial court granted the motions, and this appeal follows.

TRADITIONAL SUMMARY JUDGMENT

Standard of Review

The standard of review we apply when reviewing a summary judgment under Tex.R.Civ.P. 166a(c) is well established. The issue is whether the successful movant at the trial level carried the burden of showing that there is no genuine issue of material fact and that a judgment should be granted as a matter of law. Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471 (Tex.1991); Nixon v. Mr. Property Mgmt. Co., Inc., 690 S.W.2d 546, 548 (Tex.1985); Duran v. Furr’s Supermarkets, Inc., 921 S.W.2d 778, 784 (Tex.App.-El Paso 1996, writ denied). The question on appeal is not whether the summary judgment proof raises fact issues as to required elements of the movant’s cause or claim, but whether the summary judgment proof establishes, as a matter of law, that there is no genuine issue of material fact as to one or more elements of the movant’s cause or claim. Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex.1970); Duran, 921 S.W.2d at 784.

In resolving the issue of whether the movant has carried this burden, all evidence favorable to the non-movant must be taken as true and all reasonable inferences, including any doubts, must be resolved in the non-movant’s favor. Nixon, 690 S.W.2d at 548-49; Duran, 921 S.W.2d at 784; Stoker v. Furr’s, Inc., 813 S.W.2d 719, 721 (Tex.App.-El Paso 1991, writ denied). When the defendant is the movant and submits summary evidence disproving at least one essential element of each of the plaintiff’s causes of action, then summary judgment should be granted. Perez, 819 S.W .2d at 471. When a summary judgment is based on an affirmative defense, the movant must conclusively establish all the elements of its defense. See Rogers v. Ricane Enter., Inc., 772 S.W.2d 76, 80-81 (Tex.1989). When a trial court’s order granting summary judgment does not specify the ground or grounds relied on for its ruling, an appellate court will affirm a summary judgment if any of the theories advanced are meritorious. Carr v. Brasher, 776 S.W .2d 567, 569 (Tex.1989).

Bad Faith Claims

*4 A workers’ compensation carrier has a duty to deal fairly and in good faith with injured employees in the processing of compensation claims. Aranda v. Insurance Co. of North America, 748 S.W.2d 210, 212-13 (Tex.1988); Arnold v. National County Mutual Fire Ins. Co., 725 S.W.2d 165, 167 (Tex.1987). This duty arises out of the special trust relationship between the insured and the insurer, and is imposed on the insurer due to the disparity of bargaining power and the exclusive control that the insurer exercises over the processing of claims. Aranda, 748 S.W.2d at 212; Arnold, 725 S.W.2d at 167; Guajardo v. Liberty Mutual Ins. Co., 831 S.W.2d 358, 362 (Tex.App.-Corpus Christi 1992, writ denied).

A workers’ compensation claimant who asserts that a carrier has breached the duty of good faith and fair dealing by refusing to pay or delaying payment of a claim must prove the absence of a reasonable basis for denying or delaying payment of the benefits of the policy, and that the carrier knew or should have known that a reasonable basis did not exist for denying the claim or delaying payment of the claim. Aranda, 748 S.W.2d at 213; Lyons v. Miller Casualty Ins. Co. Of Texas, 866 S.W.2d 597, 600 (Tex.1993); State Farm Mutual Automobile Ins. Co. v. Zubiate, 808 S.W.2d 590, 597 (Tex.App.-El Paso 1991, writ denied), overruled on other grounds, 925 S.W.2d 607, 614 (Tex.1996).

The first element of this test requires an objective determination of whether a reasonable insurer under similar circumstances would have delayed or denied the claimant’s benefits. The second element balances the right of an insurer to reject an invalid claim and the duty of the carrier to investigate and pay compensable claims. This element will be met by establishing that the carrier actually knew there was no reasonable basis to deny the claim or delay payment, or by establishing that the carrier, based on its duty to investigate, should have known that there was no reasonable basis for denial or delay. Under the test, carriers will maintain the right to deny invalid or questionable claims and will not be subject to liability for an erroneous denial of a claim. Carriers that breach the duty of good faith and fair dealing, however, will be subject to liability for their tortious conduct.

Aranda, 748 S.W.2d at 213.

Whether a reasonable basis exists for denying a claim must be judged by the facts before the insurer at the time the claim was denied. Viles v. Security Nat’l Ins. Co., 788 S.W.2d 566, 568 (Tex.1990); Guajardo, 831 S.W.2d at 362. In deciding a bad faith claim, a Court must first determine what potential basis the insurance company had for its action. See National Union Fire Insurance Co. of Pittsburgh, PA v. Dominguez, 873 S.W.2d 373, 376 (Tex.1994); Columbia Universal Life Ins. Co. v. Miles, 923 S.W.2d 803, 809 (Tex.App.-El Paso 1996, writ denied). Only after this basis is located may a Court analyze the evidence supporting a “no reasonable basis” finding. Dominguez, 873 S.W.2d at 376; Miles, 923 S.W.2d at 809. The Court must then conduct a qualitative evaluation of that basis to determine whether an insurer could reasonably rely on it. Miles, 923 S.W.2d at 810. In conducting this qualitative evaluation, the Court must ask both how the insurer’s evidence was obtained and what that evidence, if accepted as true, suggests about the validity of the claim. Id. If nothing is presented suggesting that the evidence upon which the insurer relied was obtained in an unobjective or unfair manner and if that evidence, viewed in isolation, reasonably suggests that the insured’s claim is invalid or questionable, the insurer’s basis is reasonable as a matter of law. Id.

Application

*5 Orozco claims that Old Republic acted in bad faith because it knew or should have known that Dr. Ochoa used the wrong medical guides in determining his impairment rating, and that the TWCC erroneously accepted the doctor’s opinions as correct. In essence, he argues Old Republic could not reasonably rely on the decisions of the TWCC in denying his claims. We disagree.

In its traditional motion for summary judgment, Old Republic alleged that Orozco’s claim was negated because the evidence conclusively showed that Old Republic complied with the TWCC’s decisions when it denied coverage for certain medical treatments and prescriptions. To support its position, Old Republic cited the trial court to Texas Labor Code, Section 416.001, and argued that this section precluded Orozco from pursuing his bad faith claim:

An action taken by an insurance carrier under an order of the commission or recommendations of a benefit review officer under Section 410.031, 410.032, or 410.033 may not be the basis of a cause of action for breach of the duty of good faith and fair dealing.”

See Tex.Lab.Code Ann. § 416.001 (Vernon 1996).

We conclude Old Republic established its right to judgment as a matter of law. Old Republic’s summary judgment proof includes Orozco’s deposition testimony wherein he admitted that Old Republic’s actions were taken pursuant to decisions made by the TWCC. It also includes the affidavit of attorney J.L. Jay, who stated that Old Republic had complied with all of the TWCC’s orders. The record also contains all of the decisions issued by the TWCC during Orozco’s two rounds of litigation establishing that Orozco’s compensable November 5, 1991 injury was to his lower back only and did not include his later asserted neck injury, hand rash, positional vertigo, and emotional distress.

The TWCC decisions form the basis for Old Republic’s decision to refuse payment for the claims which are the basis of this suit. Those claims include the bills for Orozco’s massages, his high blood pressure medication, his YMCA membership, and his visits to the psychiatrist. All of these treatments and prescriptions, ordered by Orozco’s treating physicians, were intended to treat his high blood pressure, his emotional distress, and his neck injury. The TWCC found no relationship between these injuries and Orozco’s compensable injury. We conclude Old Republic was entitled to rely on the decisions of the TWCC and, thus, had a reasonable basis for denying the treatments and prescriptions. See Tex.Lab.Code Ann. § 416.001; Aranda, 748 S.W.2d at 213; Dominguez, 873 S.W.2d at 376; Miles, 923 S.W.2d at 809.

Because we have concluded the trial court properly granted the motion for summary judgment under Rule 166a(c), we need not address whether it acted correctly under Rule 166a(i). We will now address Orozco’s specific complaints.

CONTENTIONS ON APPEAL

In his first point of error, Orozco complains that a fact issue was created by evidence that Old Republic canceled his treatments and prescriptions without a doctor’s advice and often against the advice of its claims adjuster. There is no requirement that Old Republic seek an independent medical review of the TWCC’s decisions. It was entitled to rely on the Commission’s decisions. While the evidence reveals that Orozco’s treating doctors may disagree with the TWCC’s decision, it does not prove that Old Republic had no reasonable basis for denying coverage. There is no genuine issue of material fact concerning Old Republic’s bad faith. The first point is overruled.

*6 In his second point, Orozco alleges that summary judgment was improper because there was not an adequate time for discovery. First, we note that only Rule 166a(i) requires an “adequate time for discovery.” See Tex.R.Civ.P. 166a(i). Under traditional summary judgment practice, the defending party may move for summary judgment at anytime. See Tex.R.Civ.P. 166a(b). We have already concluded that judgment was proper under Rule 166a(c) such that Old Republic could have filed its motion at any time after it appeared or answered. See Tex.R.Civ.P. 166a(a)(b). The second point is overruled.

In his third point, Orozco complains that the trial court erred in granting the motion based on res judicata. Because we do not rely on this theory to uphold the trial court’s judgment, we overrule this point.

In his fourth point, Orozco claims that the affidavit of attorney J.L. Jay was offered in bad faith. First, he claims that Jay failed to comply with the Rules of Civil Procedure during the litigation of his underlying injury; however, this has no bearing on whether the affidavit was made in bad faith. Any complaint about violation of rules of procedure must be made on the record, in a timely and specific manner. See Tex.R.App.P. 33.1. This appeal is not the direct appeal of either cause number 93-10101 or 95-11372 and we will not address procedural errors purportedly made in the parallel cases. Orozco also contends Jay’s affidavit was made in bad faith because Jay knew or should have known that Dr. Ochoa used the wrong medical guides in determining his impairment rating. This assertion also has no bearing on whether the affidavit was offered in bad faith. The core of Orozco’s argument is that the TWCC was wrong and acted in bad faith in determining his level of impairment. He claims that no one with any knowledge of the workers’ compensation law was entitled to rely on Dr. Ochoa’s opinion or any of the TWCC’s decisions; anyone who agreed with the TWCC must have done so in bad faith. We disagree. Bad faith requires more than a showing that someone made a mistake or an error. It requires intent, which Orozco has failed to prove.³

Jay’s affidavit does little more than summarize the procedural history of Orozco’s journey through the court system. At the end, Jay testified that to his knowledge, Old Republic has followed the orders of the TWCC and had not breached its duty of good faith. We conclude that the affidavit was not offered in bad faith. Point of Error No. Four is overruled.

In his fifth point, Orozco complains that Old Republic did not meet its burden of production because it did not depose any of his witnesses. He claims that Old Republic was required to depose the thirty-two witnesses he disclosed during discovery. Rule 166a contains no requirement that Old Republic depose Orozco’s witnesses. See Tex.R.Civ.P. 166a. Old Republic was only required to produce sufficient evidence which either negated an element of Orozco’s claim, or proved an affirmative defense, as a matter of law. See Perez, 819 S.W.2d at 471; Rogers, 772 S.W.2d at 80-81. Old Republic produced evidence which negated an element of Orozco’s claim; it proved that it had a reasonable basis for denying coverage. It was Orozco’s burden to depose his own witnesses. See Tex.R.Civ.P. 166a(c)(non-moving party may file a response asserting fact issues exist and attach evidence supporting its claim). Orozco’s fifth point is overruled.

*7 In his sixth point, Orozco argues summary judgment was improper because Old Republic filed a jury demand. This is not a procedural bar which denies a court the power to later dispose of a case on summary judgment. At any time after the defending party has answered, any party may move for summary judgment regardless of whether another party has requested a jury trial. See Tex.R.Civ.P. 166a(a)(b). Under Rule 166a, a party is only entitled to a jury trial if there exists a genuine issue of material fact which a jury could decide. See Nixon, 690 S.W.2d at 548-49; Duran, 921 S.W.2d at 784. Orozco was not entitled to a jury trial because no genuine issue of material fact existed as to his bad faith claim. The sixth point is overruled.

Orozco’s reply brief contains six additional points which we will not address in detail. The six points are cumulative of Orozco’s general complaint that Dr. Ochoa and the TWCC have made the wrong decision regarding his level of impairment. He seeks once again to collaterally attack the judgment rendered in the first round of TWCC hearings. That judgment is still pending on appeal to the district court as cause number 93-10101. Any attacks made on the TWCC’s judgment must be made on direct appeal of that judgment.

We overrule the points of error and affirm the judgment.

	Footnotes
1		See Orozco v. Old Republic Ins. Co., 08-99-00065-CV (Tex.App.-El Paso June 29, 2000, no pet. h.)(not designated for publication).
2		During oral argument in the current cause, Orozco indicated that a bench trial was conducted in April 2000.
3		The record shows the TWCC has consistently rejected Orozco’s claim that Dr. Ochoa’s impairment rating was erroneous because he used the wrong version of the medical guides. The TWCC has repeatedly affirmed Dr. Ochoa’s decision because he made his calculations according to the proper charts albeit from the wrong version of the medical guides.