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Hand & Wrist Center of Houston Pa. v. Sgs Control Services, Inc.
July 16, 2013
409 S.W.3d 743
1st COA – Houston
Published Opinion

Hand & Wrist Center of Houston Pa. v. Sgs Control Services, Inc.

Court of Appeals of Texas,

Houston (1st Dist.).




No. 01–12–00411–CV.


July 16, 2013.

Attorneys & Firms

*745 Timothy A. Hootman, Houston, TX, for Appellant.

Harry Miles Klaff, Tally Rochon Pugh Perez, Brown Sims, P.C., Houston, TX, for Appellee.

Panel consists of Justices BLAND.



After Charles Reagan was injured during the course and scope of his employment, his employer, SGS North America, Inc. (“SGS”), took him to Hand & Wrist Center, P.A. (“Hand & Wrist”) for treatment, and one of SGS’s employees signed a “Letter of Guarantee,” obligating SGS to pay Hand & Wrist the fees charged for Reagan’s medical expenses if its workers’ compensation insurance coverage did not cover the claim. SGS did not pay Hand & Wrist, and Hand & Wrist sued to recover the costs of its “usual and customary fees” for the medical services rendered to Reagan. SGS filed a plea to the jurisdiction, arguing that the trial court lacked subject matter jurisdiction because Hand & Wrist failed to exhaust its administrative remedies prior to filing suit. The trial court granted the plea and dismissed the case. In three issues, Hand & Wrist contends that (1) the trial court erroneously granted the plea to the jurisdiction because the evidence demonstrated that SGS elected not to invoke its workers’ compensation *746 coverage for this claim; (2) the exclusive remedies provision of the Workers’ Compensation Act does not apply to health care providers such as Hand & Wrist; and (3) the Texas Legislature did not intend for the exclusive remedies provision to apply to both employees seeking compensation benefits and health care providers.

We affirm.


On May 7, 2010, Charles Reagan injured his hand while at work and was referred to Hand & Wrist for treatment. Randy Davis, SGS’s regional Health, Safety, and Environmental Coordinator, accompanied Reagan to Hand & Wrist. Davis, in his capacity as “HSE Coordinator,” signed a Letter of Guarantee presented by Hand & Wrist administrative staff. This letter provided:

SGS Control (hereafter called “the Company”) desires that Charles Reagan (hereafter called “the Patient”) receive medical care for injuries sustained on or about 05/07/2010. In that regard, the Company hereby agrees to the following. The Company guarantees that it will pay Hand & Wrist Center of Houston, P.A., SCA Houston Hospital for Specialized Surgery, L.P., and Gulf Anesthesia Associates, P.A. (hereafter called “the medical care providers”) their usual and customary fees for medical care rendered to the Patient. Payment will be made within 30 days after receiving notice. This Letter of Guarantee may be canceled only with 30 days written notice by either party.

The Medical Providers will not seek additional payment from the Company under this Letter of Guarantee if 1) payment is made by an insurance carrier in accordance with the Texas Department of Insurance–Division of Worker’s Compensation statutory fee schedule, or 2) payment is made under terms of a Certified Health Care Network’s contracted fee schedule, 3) payment is made by a Third Party Administrator’s Provider Agreement, if any are in effect, or 4) the Company has workers’ compensation insurance with Texas Mutual Insurance Company.

Payment will be made even if the injury is determined to have occurred while the Patient was not at work, or if the injury is not reported to the insurance carrier (if any), or if a claim is not filed with the insurance carrier, by the Employer, in a timely fashion. Payment will be made even if the patient tests positive for drugs or alcohol at the time of the injury.

Any dispute regarding this Letter of Guarantee will be resolved in a Court of Harris County, Texas. Because the Company agrees to pay these fees if and when there is no insurance coverage, then lack of insurance is not a defense to payment of the fees. This Letter of Guarantee is effective upon the date appearing below. This agreement may only be modified or terminated in writing. This agreement is an enforceable contract.

Hand & Wrist billed a total of $5,850.75 for Reagan’s medical care. It is undisputed that SGS never paid Hand & Wrist for the care provided to Reagan.1

After several unsuccessful attempts to obtain payment from SGS, Hand & Wrist sued SGS for breach of contract. Hand & Wrist alleged that, in the Letter of Guarantee, SGS “agreed to pay for the medical *747 services to be provided to Charles Reagan for injuries he sustained on or about the same day that the contract was signed,” but SGS failed to pay after repeated requests for payment.

SGS answered and filed a plea to the jurisdiction. In its plea, SGS asserted that Reagan was injured during the course and scope of his employment and that SGS had workers’ compensation insurance coverage. Thus, the Texas Department of Insurance–Workers’ Compensation Division (“the Division”) had exclusive jurisdiction over any disputes about payment arising out of the medical care provided for Reagan’s injury “until the administrative remedy has been exhausted.” SGS alleged that Hand & Wrist had not submitted a valid claim for payment to its workers’ compensation insurance carrier nor had it “participated in the medical dispute resolution process provided for under the [Texas Workers’ Compensation Act].” As a result, it argued that Hand & Wrist had not exhausted its administrative remedies and that the trial court therefore lacked subject matter jurisdiction over the dispute.

Hand & Wrist filed the following response:

Defendant claims that its plea to the jurisdiction should be granted because defendant is a subscriber to workers’ compensation insurance. This argument fails because plaintiff’s claim is based on a contract that defendant signed agreeing to pay the fee for the medical services under several conditions stated in the contract. In this case, plaintiff has not been paid by workers’ compensation insurance or any other source, and therefore, under the terms of the contract, defendant is obligated to pay regardless of whether it was or was not a subscriber to workers’ compensation insurance.

The trial court held a hearing on SGS’s plea to the jurisdiction. At the hearing, Sean Lundy, Hand & Wrist’s medical practice executive, testified concerning the services Hand & Wrist provided to Reagan and its attempts to recover payment for its services. He testified that the letter of guarantee used by Hand & Wrist in cases involving injured employees allows an employer to determine whether it wants its insurance carrier to cover a claim or whether it wants to “take care of it [itself],” but the letter “does not allow [an employer] to not pay.” Lundy understood the Letter of Guarantee to be an agreement that “SGS is going to pay if [it does not] elect to invoke [its] workers’ comp or if there is not workers’ comp coverage.” Lundy testified that SGS did not inform Hand & Wrist of its insurance carrier, and therefore Hand & Wrist did not know whom to bill, aside from SGS, for Reagan’s medical care. On cross-examination, Lundy testified that SGS elected not to use its workers’ compensation insurance coverage for this claim, and, as evidence for this assertion, he stated that SGS “did not turn the claim over to [its] workers’ comp insurance company within [its] timely filing deadline.” He acknowledged that he had no documentation that SGS did not report the claim to its insurance carrier, that SGS told Hand & Wrist that it was not going to use its workers’ compensation insurance, or that SGS elected to pay for the services itself. SGS did not object to Lundy’s testimony, and it did not offer any evidence of its own at this hearing.

The trial court granted SGS’s plea to the jurisdiction and dismissed Hand & Wrist’s suit without prejudice.

Hand & Wrist then moved for a new trial. It argued that it presented unrebutted evidence at the hearing that it had complied with the requirements of the Texas Workers’ Compensation Act. It also *748 argued that the Division does not have jurisdiction over this case because “under the factual circumstances presented by [Hand & Wrist’s] unrebutted testimony, the [Workers’ Compensation] Act does not provide [Hand & Wrist] with a remedy.” It argued that Hand & Wrist’s only relief, and its only method to obtain the payment that it is owed under the Letter of Guarantee, was via an action for breach of contract.

In its response to Hand & Wrist’s motion for new trial, SGS presented the affidavit of Randy Davis. Davis averred that when he arrived at Hand & Wrist with Reagan, he informed Hand & Wrist personnel that the injury was work-related and that SGS had workers’ compensation insurance. SGS also presented evidence that it notified its insurance carrier of the injury on May 11, 2010, four days after the injury occurred. SGS also attached a pre-authorization request for occupational therapy from Hand & Wrist, submitted to SGS’s insurance carrier two weeks after Reagan’s injury, and a letter from SGS’s insurance carrier approving the request. SGS argued that Hand & Wrist properly complied with the Workers’ Compensation Act’s pre-authorization requirements, but it never submitted a bill for Reagan’s medical services to SGS’s insurance carrier. Further, SGS presented evidence that its insurance carrier partially paid Hand & Wrist for the medical services rendered. SGS argued that if Hand & Wrist was dissatisfied with receiving only partial payment, it could have filed a dispute with the Division and proceeded through the medical fee dispute resolution process, which would have exhausted Hand & Wrist’s administrative remedies.

SGS also pointed out that, even if Hand & Wrist’s assertion that it timely presented its bills for payment was correct, the Workers’ Compensation Act provided a remedy if SGS’s insurance carrier failed to pay. Thus, Hand & Wrist was not left with a breach of contract suit as its only method of recovering payment. SGS argued that because Hand & Wrist “failed to participate in any step of the administrative process, much less exhaust its administrative remedies, this Court does not have subject-matter jurisdiction over this claim.”

The trial court denied Hand & Wrist’s motion for new trial, and this appeal followed.

Plea to the Jurisdiction

In its first issue, Hand & Wrist contends that the trial court erroneously granted SGS’s plea to the jurisdiction because the evidence reflected that SGS did not elect to invoke its workers’ compensation insurance coverage for Reagan’s claim. In its second and third issues, it contends that the exclusive remedies provision of the Workers’ Compensation Act applies only to employees and does not apply to health care providers. We consider these issues together.

A. Standard of Review

We review a trial court’s ruling on a plea to the jurisdiction de novo. See Id. at 228.

The trial court has jurisdiction to hear a claim and award damages “only to the extent that relief is not dependent upon the adjudication, directly or indirectly, of a matter within the [Division’s] exclusive jurisdiction.” Duenez, 288 S.W.3d at 906 (“When an agency has exclusive jurisdiction of a dispute, the courts have no jurisdiction until administrative procedures are exhausted.”).

B. Invocation of Workers’ Compensation Coverage

Hand & Wrist argues that it was not required to comply with the provisions of the Workers’ Compensation Act, including the exhaustion of administrative remedies, because SGS “elected to not invoke its workers’ compensation coverage” with respect to the treatment provided to Reagan. As support for this contention, Hand & Wrist points to the testimony of Sean Lundy, who testified that SGS did not invoke its coverage because it failed to report Reagan’s injury to its insurance carrier in a timely manner. SGS responds that once it initially obtained its workers’ compensation insurance coverage, it did not need to affirmatively “elect” or “invoke” that coverage on a claim-by-claim basis. We agree with SGS.

Tex. Workers’ Comp. Ins. Fund v. Del Indus., Inc., 35 S.W.3d 591, 596 (Tex.2000) (holding same).

Section 409.005 has been furnished.” Id. § 409.008 (Vernon 2006) (allowing tolling when employer fails to file injury report with insurance carrier); Id. § 409.003 (Vernon 2006) (setting one-year limitations period for filing claims for compensation).

In construing the predecessor statute to Wesby v. Act Pipe & Supply, Inc., 199 S.W.3d 614, 618 (Tex.App.-Dallas 2006, no pet.) (reaching same conclusion with respect to provision requiring employer to notify employees that it is covered by workers’ compensation insurance).

Wesby, 199 S.W.3d at 618 (following same rationale in holding that failure to notify employees of workers’ compensation coverage does not result in waiver).

Hand & Wrist presented evidence, in the form of Lundy’s testimony, that SGS did not notify its insurance carrier of Reagan’s injury in a timely manner. Even when taking this testimony as true, as we must when reviewing a plea to the jurisdiction, we conclude that it is not evidence that SGS failed to “invoke” its workers’ compensation insurance coverage. See Kirwan, 298 S.W.3d at 622 (providing that, when reviewing plea to jurisdiction, we must “take as true all evidence favorable to the nonmovant” and “indulge every reasonable inference and resolve any doubts in the nonmovant’s favor”). SGS “invoked” its workers’ compensation insurance coverage when it initially obtained the coverage; it was not required to take any specific action to “invoke” that coverage after Reagan was injured, and it did not forfeit its protections under the Workers’ Compensation Act when it failed to notify its insurance carrier of Reagan’s injury in a timely manner. We therefore conclude that the Workers’ Compensation Act applies to this case, and all parties involved—Reagan, SGS, SGS’s insurance carrier, and Hand & Wrist—were required to comply with the Act’s provisions to resolve any disputes.

C. Exhaustion of Administrative Remedies

In the Workers’ Compensation Act, the Texas Legislature granted authority to the Division to adopt policies and guidelines concerning reimbursement to health care providers in workers’ compensation cases. See Main Rehab. & Diagnostic Ctr., 376 S.W.3d at 830–31 (“A health care provider under the workers’ compensation system has the right to seek [medical dispute resolution] before the Division when the provider has rendered a medical service but has been paid a reduced amount for that service.”).

Texas Administrative Code Chapter 133 sets out the procedures that the health care provider must follow to obtain payment from an insurance carrier for treatment provided to a workers’ compensation claimant. See, e.g., *752 Main Rehab. & Diagnostic Ctr., 376 S.W.3d at 831 (stating same).

By granting the Division the sole authority to make an initial determination of a medical fee dispute, the Legislature has given the Division exclusive jurisdiction over these disputes. See In re Mid–Century Ins. Co., 2012 WL 4717884, at *3.

Here, Hand & Wrist sought recovery of the entire amount of the fees that it had billed for the medical services rendered to Reagan. In re Mid–Century Ins. Co., 2012 WL 4717884, at *3.

D. Applicability of Section 408.001(a)’s Exclusive Remedies Provision

Hand & Wrist also argues that section 408.001(a) has no applicability to this case, but that does not change our conclusion that Hand & Wrist was required to exhaust its administrative remedies before filing suit.

Warnke v. Nabors Drilling USA, L.P., 358 S.W.3d 338, 343 (Tex.App.-Houston [1st Dist.] 2011, no pet.).

In this case, as SGS notes, no party raised the applicability of section 408.001(a) before the trial court, either in the plea to the jurisdiction or in the motion for new trial. SGS did not plead and prove this affirmative defense, and neither party argued that this section either does or does not support granting the plea to the jurisdiction. Thus, Hand & Wrist is incorrect in its assertion that the trial court relied upon this statute in granting SGS’s plea to the jurisdiction.

Furthermore, Labor Code Chapter 408, entitled “Workers’ Compensation Benefits,” addresses the employee’s ability to recover specific types of benefits, such as, for example, medical or temporary income benefits. See, e.g., TEX. LABOR CODE ANN. § 408.021 (Vernon 2006) (addressing entitlement to medical benefits); id. § 408.101 (Vernon 2006) (addressing entitlement to temporary income benefits). The focus of this chapter, as both parties point out, is on the employee and what he may recover as compensation for his work-related injury.

In arguing that the trial court improperly granted the plea to the jurisdiction, Hand & Wrist fails to consider Labor Code Chapter 413, entitled “Medical Review.” The focus of this chapter is on health care providers and insurance carriers, and it addresses issues such as reimbursement policies and payment to health care providers by insurance carriers. See, e.g., id. section 413.031, which, as we have already noted, allows a health care provider to seek “review of a medical service provided ... if [the] health care *754 provider is ... denied payment or paid a reduced amount for the medical service rendered.” Id. § 413.031(a)(1).

section 413.031 does, and it requires exhaustion of administrative remedies before the health care provider can bring its medical fee dispute in the district court.

Because Hand & Wrist did not exhaust its administrative remedies prior to filing suit, we hold that the trial court properly granted SGS’s plea to the jurisdiction.


We affirm the judgment of the trial court.



The parties acknowledge that, after Hand & Wrist filed suit against SGS, SGS’s insurance carrier partially paid the amounts billed by Hand & Wrist for Reagan’s medical care. SGS’s insurance carrier paid $3,320.13 to Hand & Wrist.


Furthermore, section 409.008 provides that, when an employer fails to furnish the required injury report to the insurance carrier, the time period for an employee to file a claim for compensation is tolled until such report is furnished, indicating that the employer’s failure to provide notice of the injury does not remove the case from the purview of the Workers’ Compensation Act. See TEX. LABOR CODE ANN. § 409.008 (Vernon 2006).

End of Document