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At a Glance:
State Office of Risk Management v. Lawton
August 28, 2009
295 S.W.3d 646
Texas Supreme Court
Published Opinion

State Office of Risk Management v. Lawton

Supreme Court of Texas.



Mary LAWTON, Respondent.

No. 08–0363.


Argued March 11, 2009.


Decided Aug. 28, 2009.


Rehearing Denied Nov. 20, 2009.

Attorneys & Firms

*646 Kent C. Sullivan, Austin, TX, for Petitioner.

Stuart F. Lewis, Law Office of Stuart F. Lewis, Bryan, TX, for Respondent.

P.M. Schenkkan, Graves Dougherty Hearon & Moody, P.C., Austin, TX, for Amicus Curiae.

Wade Caven Crosnoe, Thompson Coe Cousins & Irons, L.L.P., Austin, TX, for Amicus Curiae.

Elaine M. Chaney, Director of Legal Services, for Amicus Curiae.

Bradley Dean McClellan, Austin, TX, for Amicus Curiae–Texas State Employees.


Chief Justice JEFFERSON delivered the opinion of the Court.

In an effort to streamline workers’ compensation claim processing, the Legislature established time limits applicable to *647 compensability disputes. See Act of Dec. 11, 1989, 71st Leg., 2nd C.S., ch. 1, § 5.21(a), 1989 Tex. Gen. Laws 1, 51. These limits furthered “the legislative goal of providing employees with either prompt payment or notice of denial of benefits.” Sw. Bell Tel. Co. v. Mitchell, 276 S.W.3d 443, 448 (Tex.2008). Today we must decide whether the sixty-day period for challenging compensability of an injury also applies to a dispute over the extent of injury, if the basis for that dispute could have been discovered by a reasonable investigation within the waiver period. We hold it does not and therefore reverse the court of appeals’ judgment.


Factual and Procedural Background

On July 5, 2005, Mary Lawton, a Texas Department of Criminal Justice employee, hit her left knee on a steel monitor while at work. A physician diagnosed her with a left degenerative joint disease.

Following a contested case hearing, the hearing officer concluded that SORM waived the right to contest responsibility for the SORM’s petition for review, 52 Tex.Sup.Ct.J. 333 (Feb. 13, 2009), and now reverse.



This appeal concerns the interpretation of both a statutory provision and an *648 administrative rule. Texas Labor Code subsection 409.021(c) provides, in pertinent part:

If an insurance carrier does not contest the compensability of an injury on or before the 60th day after the date on which the insurance carrier is notified of the injury, the insurance carrier waives its right to contest compensability.

TEX. LAB. CODE § 409.021(c).

The administrative rule states:

Texas Labor Code, § 409.021 and subsection (a) of this section do not apply to disputes of extent of injury. If a carrier receives a medical bill that involves treatment(s) or service(s) that the carrier believes is not related to the compensable injury, the carrier shall file a notice of dispute of extent of injury (notice of dispute). The notice of dispute shall be filed ... not later than the earlier of:

(1) the date the carrier denied the medical bill; or

(2) the due date for the carrier to pay or deny the medical bill as provided in Chapter 133 of this title (relating to General Medical Provisions).

28 TEX. ADMIN CODE § 124.3(e) (“Rule 124.3(e)”).

The court of appeals reviewed both of these provisions and determined that SORM’s contest did not pertain to compensability: “SORM’s dispute is not a denial of Lawton’s entitlement to benefits in general or a dispute as to the overall injury, ... [rather the] complaint falls within the scope of an extent of injury dispute.” 256 S.W.3d at 440. We agree.

The court then examined a Texas Workers’ Compensation Commission2 appeals panel decision that stated:

[T]he injury that becomes compensable by virtue of waiver is not necessarily limited by the information listed on the first written notice of injury. Rather the nature of the injury will be defined by that information that could have been reasonably discovered in the carrier’s investigation prior to the expiration of the waiver period.

Appeals Panel No. 041738–s, Section 409.021, and conflicts with Rule 124.3(e) and the [Division]’s intent in adopting the rule.” We agree.

Rodriguez v. Serv. Lloyds Ins. Co., 997 S.W.2d 248, 254 (Tex.1999) (noting that “our primary objective is to give effect to the [Division’s] intent,” and “[o]ur best source of the [Division’s] intent is the Texas Register”). In relation to Rule 124.3, the Texas Register provides:

Texas Labor Code, § 409.021, is intended to apply to the compensability of the injury itself or the carrier’s liability for the claim as a whole, not individual aspects of the claim. When a carrier disputes the extent of an injury, it is not denying the compensability of the claim as a whole, it is disputing an aspect of the claim.... [A] dispute involving extent of injury is a dispute over the amount or type of benefits, specifically, medical benefits, to which the employee is entitled (i.e. what body areas/systems, injuries, conditions, or symptoms for which the employee is entitled to treatment); it is not a denial of the employee’s entitlement to benefits in general.

25 Tex. Reg. 2096, 2097 (2000) (noting that, as required by statute, “the [Division]’s reasoned justification for this rule is set out in this order”). The Texas Register also notes that “[t]he timeframes for a denial of a claim in its entirety such as those addressed in subsection (a) are statutorily driven by Texas Labor Code, § 409.021 and are tied to notice of the injury. Extent of injury disputes are not so governed.” Id. at 2100. Nowhere in the text of the rule, the statute, or the Texas Register is there a suggestion that a carrier waives the right to challenge the extent of an injury if the extent of that claim was reasonably discoverable within the period for determining compensability.

Moreover, implying such a requirement would eliminate the distinction between compensability and extent: a dispute about any injury reasonably discoverable within sixty days of the initial notice would be governed by the deadlines for compensability, while information obtained outside that time frame would fall under the deadlines for disputing extent. Not only does this contravene the statute and the rule, it would create an unworkable situation. A carrier who received medical information within the sixty-day period—even on the fifty-ninth day—would have to determine immediately whether to contest the injury’s extent (or its discoverability)4 or waive its right to do so. This would lead to an investigation of all conditions that may be “reasonably discoverable,” resulting in increased costs and premature or unnecessary disputes (as a worker may never seek benefits for those conditions). Although the sixty-day period governs only compensability, not extent, the Legislature and the Division have ensured that workers enjoy certain protections during extent-related disputes including, in certain cases, expedited proceedings, benefits during appeal, interlocutory orders requiring medical and income benefits, and examinations by designated doctors. See 133.306(b).

Here, SORM agreed that Lawton’s injury was compensable. When it later disputed the extent of that injury, it was governed by the deadline applicable to *650 such disputes, not the sixty-day deadline governing compensability. A carrier has up to forty-five days from the date it receives a complete medical bill to dispute whether that treatment was necessary. See Sanders v. Am. Prot. Ins. Co., 260 S.W.3d 682, 685 (Tex.App.-Dallas 2008, no pet.).

Accordingly, we reverse the court of appeals’ judgment, render judgment that SORM did not waive the right to contest the extent of Lawton’s TEX.R.APP. P. 60.2(c), (d).



SORM administers “insurance services obtained by state agencies, including the government employees workers’ compensation insurance program....” TEX. LAB.CODE § 412.011(a). SORM is treated as an “insurer” for purposes of applying chapter 409 of the Labor Code. Id. § 501.002(c).


The Commission is now known as the Division of Workers’ Compensation, a division of the Texas Department of Insurance. See Act of May 29, 2005, 79th Leg., R.S., ch. 265, § 1.003, 2005 Tex. Gen. Laws 469, 470.


Rodriguez v. Serv. Lloyds Ins. Co., 997 S.W.2d 248, 254 (Tex.1999).


Amicus curiae Office of Injured Employee Counsel cites two appeals panel decisions holding that injuries not diagnosed until the fifty-eighth and fifty-seventh days, respectively, of the sixty-day period were not discoverable by reasonable investigation during that period. See Appeals Panel No. 070181, 2007 WL 747440, at *3–*4 (Tex. Workers’ Comp. Comm’n Feb. 21, 2007);.

End of Document