American Zurich Ins. Co. v. Samudio

Supreme Court of Texas.

AMERICAN ZURICH INSURANCE COMPANY, Petitioner,

v.

Daniel SAMUDIO, Respondent.

No. 10–0554.

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Argued Jan. 10, 2012.

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Decided June 29, 2012.

Attorneys & Firms

*364 Gregory D. Solcher, Flahive, Ogden & Latson PC, Austin TX, for American Zurich Insurance Company.

David Q. Haag II, Blackwell & Haag, P.C., Houston TX, for Daniel Samudio.

Nicholas Canaday III, Office of the Attorney General, Austin, TX, for Amicus Curiae Texas Department of Insurance Division of Workers’ Compensation.

Marcos Benjamin Guerra, Assistant Attorney General, for Amicus Curiae State Office Risk Management.

Opinion

Justice LEHRMANN delivered the opinion of the Court.

Under the Texas Workers’ Compensation Act, an injured worker’s impairment income benefits are determined in part by the impairment rating assigned by the Texas Department of Insurance’s Division of Workers’ Compensation. TEX. LAB.CODE § 410.306(c). We must decide whether a reviewing court lacks subject matter jurisdiction to resolve an impairment rating appeal if the only rating presented to the agency was invalid. We hold that the absence of a valid impairment rating does not deprive the court of jurisdiction. Consequently, we reverse the court of appeals’ judgment and remand to the trial court.

I. Background

Daniel Samudio suffered a back injury during the course of his employment that was compensable under the Texas Workers’ Compensation Act. See TEX. LAB.CODE § 401.11. He eventually had four surgeries to rectify the injury, including a Am. Home Assur. Co. v. Poehler, 323 S.W.3d 626, 631 (Tex.App.-Tyler 2010, pet. pending). Petitioner Zurich American Insurance Company provided workers’ compensation coverage to Samudio’s employer.

After Samudio filed a claim for medical benefits under the Act, the Division appointed Dr. Gaston Machado as the designated doctor in the case to determine the date Samudio reached maximum medical improvement and his impairment rating under section 408.123 of the Act. An injured worker who suffers a permanent functional or anatomical impairment after reaching maximum medical improvement is entitled to impairment income benefits, the duration of which depend on the assigned impairment rating. Id. §§ 408.121(a)(1); 408.126. An impairment rating of more than fifteen percent may entitle the worker to supplemental income benefits after impairment income benefits would otherwise expire. Id. § 408.142(a)(1).

spinal fusion surgery as a factor in calculating the impairment rating.

American Zurich disputed the impairment rating, and the Division commenced a contested case hearing. At the hearing, the carrier submitted a letter from Dr. John Obermiller. Although he opined that Samudio’s impairment rating would be properly calculated at ten percent, Obermiller never examined Samudio, and expressly stated that he was not providing an impairment rating. Instead, he explained that his purpose was to show that Machado’s analysis did not conform to the Guides. After the close of the hearing, the hearing examiner issued a decision finding that Samudio had an impairment rating of twenty percent. The examiner also specifically found that only one impairment rating was offered during the contested case proceeding. American Zurich appealed the examiner’s decision to the appeals panel. In February 2006, the Division notified the parties that the hearing officer’s decision was final.

American Zurich then appealed to the district court. It contended that the impairment rating the Division assigned was invalid, and that Samudio had either no impairment rating, or that the correct rating was ten. While the appeal was pending, the Austin court of appeals decided 317 S.W.3d 336, 348.

II. Jurisdiction

In an appeal of an injured worker’s entitlement to impairment income benefits, the Legislature has provided for a modified trial de novo. Id. at 348–49.

A. Section 410.306(c) is not a jurisdictional limit

In section 410.306(c) could be seen as a limit on trial courts’ subject matter jurisdiction.

Subject matter jurisdiction limits speak to the power of courts to decide a particular type of controversy, not to the evidence that courts may consider or the scope of the remedy they can afford in a particular case. See section 410.306(c) does not allow a reviewing court to consider impairment evidence that was not before the Division, or to award an impairment rating that was not presented to the agency, it does not limit the trial court’s subject matter jurisdiction.

The court of appeals’ decision was driven largely by its conclusion that the trial court was not empowered to set aside the impairment rating assigned by the division in the absence of a competing rating that was presented to the agency. See section 408.123 requires, and expressly disclaimed an intent to assess an impairment rating. Further, no one presented evidence to the Division that Samudio’s impairment rating was zero, and it is undisputed that he had suffered some permanent impairment. We disagree with the court of appeals, however, that the trial court was left with *368 no alternative but to leave in place a putatively invalid impairment rating.

B. Remand to the agency

Samudio contends that the trial court properly dismissed this case because section 410.306(c) deprived it of any power to set aside the impairment rating assigned by the Division, even if the rating was invalid. American Zurich and amicus curiae Texas Department of Insurance Workers’ Compensation Division disagree. They maintain that, if the trial court concluded that the assigned rating was invalid, it could reverse the Division’s decision and remand to the agency.³ We agree with American Zurich and the Division.

Our fundamental purpose in construing statutes is to determine and give effect to the Legislature’s intent. Presidio Ind. Sch. Dist. v. Scott, 309 S.W.3d 927, 929–30 (Tex.2010)). The application of these principles lead us to conclude that a trial court may remand to the Division to allow it to determine a valid impairment rating if the court concludes that no valid impairment rating was presented to the agency in the underlying contested case.

First, under section 408.124(b). Moreover, in considering whether an impairment rating submitted to the Division is valid, a reviewing court is not making a “determination of impairment.” Instead, the court is deciding a purely legal question: whether the proffered rating was made in accordance with statutory requirements.

More importantly, the general statutory scheme laid out by the Legislature compels a remand to allow the Division to determine Samudio’s impairment rating as of April 7, 2004, the date the parties stipulated he reached maximum medical improvement, if the trial court finds that Samudio’s twenty percent rating is invalid. The Legislature established a detailed, very specific process for the assignment of impairment ratings and the resolution of ratings disputes. See section 410.306(c) does not preclude a trial court from remanding to the Division when the only impairment rating offered is invalid. To the contrary, a remand is the course most consistent with the overall process established by the Legislature. The court of appeals erred in affirming the trial court’s judgment dismissing American Zurich’s appeal.

III. Attorney’s fees

Finally, American Zurich contends that, to the extent the court of appeals erred in affirming the trial court’s judgment, it also erred in awarding fees under section 408.221 of the Act. We agree. In light of our reversal, it is no longer true that Samudio prevailed on an issue on which judicial review was sought by the carrier. See TEX. LAB.CODE § 408.122(c).

IV. Conclusion

While section 410.310(c) limits the evidence that a trial court may consider in reviewing an impairment rating assigned by the Division and precludes the court from assigning a rating that was not presented to the agency, it does not prevent the court from setting aside an invalid rating and remanding to the Division for further proceedings. We therefore reverse the court of appeals’ judgment and remand to the trial court. If the trial court determines that no rating made in conformance with the Guides was presented to the agency, it should remand to the Division for a new impairment determination.