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At a Glance:
Title:
In re Crawford & Company
Date:
February 27, 2015
Citation:
458 S.W.3d 920
Court:
Texas Supreme Court
Status:
Published Opinion

In re Crawford & Company

Supreme Court of Texas.

IN RE CRAWFORD & COMPANY, Crawford & Company Healthcare Management, Inc., Patsy Hogan and Old Republic Insurance Company, Relators

No. 14–0256

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Opinion Delivered: February 27, 2015

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Rehearing Denied June 5, 2015

*921 ON PETITION FOR WRIT OF MANDAMUS

Attorneys & Firms

Richard Lee ‘Rick’ Smith Jr., Greg K. Winslett, Quilling Selander Lownds Winslett & Moser, P.C., Dallas, for Relators Crawford & Company, Patsy Hogan, Crawford & Company Healthcare Management, Inc.

Robert D. Stokes, Flahive Ogden & Latson PC, Austin, for Relator Old Republic Insurance Company.

Michael Keith Bradley, Bradley Law Firm, Cleburn, for Real Parties in Interest Edward Glenn Johnson, Natalie Johnson.

Opinion

PER CURIAM

Relators in this mandamus proceeding contend that the trial court abused its discretion when it refused to dismiss claims over which the Division of Workers’ Compensation has exclusive jurisdiction. Because all of the claims arise out of relators’ investigation, handling, and settling of claims for workers’ compensation benefits, we agree.

In 1998, Glenn Johnson suffered traumatic and debilitating injuries while working for ASARCO. The parties do not dispute that Johnson was severely injured or *922 that he is entitled to receive lifetime workers’ compensation benefits. Disputes over the details and amounts of those benefits, however, led Johnson to request a benefit review conference in 2008, which led to a contested case hearing the following year. It appears from the parties’ briefs that the suit for judicial review of that decision remains pending in the district court.

Meanwhile, separate from the administrative proceedings, Johnson and his wife, Natalie, filed the underlying suit against ASARCO’s workers’ compensation insurance provider Old Republic Insurance Company; its claims services contractors Crawford & Company and Crawford & Company Healthcare Management, Inc.; and their employee Patsy Hogan (collectively, Crawford). The Johnsons allege that, over a period of nearly ten years, Crawford engaged in “a battle plan to delay, discourage and deny” benefits that the Johnsons were entitled to receive. Specifically, the Johnsons contend that Crawford (a) wrongfully disputed, denied, and delayed medical benefits, (b) misrepresented which benefits were and were not covered, (c) failed to provide required notices and other information, (d) repeatedly agreed to pay for benefits and services but then refused to do so, (e) performed inadequate and misleading investigations into the Johnsons’ claim for benefits, and (f) falsely accused the Johnsons of insurance fraud, leading to their wrongful arrests and a two-year prosecution that ultimately terminated in the Johnsons’ favor. In short, the Johnsons allege that, “[r]ather than manage the claim” and adjust it “in a fair and reasonable manner,” Crawford “resorted to combat tactics to wreak havoc on Glenn’s and Natalie’s lives.”

Based on these allegations, the Johnsons pled numerous causes of action, some sounding in tort (negligence; gross negligence; negligent, fraudulent, and intentional misrepresentation; fraud; fraud by non-disclosure; fraudulent inducement; intentional infliction of emotional distress; malicious prosecution; and conspiracy); some sounding in contract (breach of contract; quantum meruit; and breach of the common law duty of good faith and fair dealing); and some alleging violations of statutory duties (under the Texas Insurance Code and the Texas Deceptive Trade Practices Act). The Johnsons sought relief in the form of actual damages for physical injuries, mental injuries, loss of income, and loss of reputation; exemplary damages; statutory damages; and injunctive relief prohibiting Crawford from continuing to engage in such “extreme and outrageous” conduct.

The Johnsons specifically pled that the Texas Workers’ Compensation Act does not require them to pursue their claims through its administrative procedures or otherwise exhaust administrative remedies because (1) the Act’s administrative procedures do not apply to some of their claims; (2) Crawford’s “subterfuge” of the workers’ compensation system relieves the Johnsons from any duties under that system; and (3) the Johnsons are seeking to recover for “independent injuries ... that are unrelated to [Glenn’s] workers[’] compensation injuries and the benefits that he is entitled to under that system.” While the Johnsons agree that they must pursue their claims for workers’ compensation benefits through the administrative process, they contend that they can pursue these claims for additional, independent, and “unrelated” damages in the courts.

Crawford disagreed and filed a plea to the jurisdiction and motion for summary judgment. Relying primarily on our decision in Ruttiger,” Crawford alternatively asserted that no evidence supported those claims. The trial court dismissed the Johnsons’ claims for breach of the common law duty of good faith and fair dealing and for violations of the Texas Insurance Code but refused to dismiss any of the other claims. The court of appeals denied Crawford’s petition for mandamus relief.1

We conclude that the Division of Workers’ Compensation has exclusive jurisdiction over the Johnsons’ claims and the Workers’ Compensation Act provides their exclusive remedies. The Act designates the Department of Insurance as the administrative agency responsible “[for overseeing] the workers’ compensation system of this state” and establishes the Division of Workers’ Compensation within the Department to “administer and operate” that system. 381 S.W.3d at 443.

In light of the Act’s comprehensive system for resolving workers’ compensation claims2 and the Division’s role in that process, we concluded in Id. at 444.3

We also held that the claimant in Ruttiger, 381 S.W.3d at 445.

For the same reasons, we also overruled our precedent that pre-dated the current version of the Act and held that “an injured employee may not assert a common-law claim for breach of the duty of good faith and fair dealing against a workers’ compensation carrier.” Id.

We did not hold in Id.

In summary, we held in Id. at 444, 456.

In this case, the parties dispute whether and how Id.

We agree with Crawford that the court of appeals read Id. at 446.

Whether the Act provides the exclusive process and remedies, therefore, does not depend on the label of the cause of action asserted. As we have often explained, claimants may not recast claims to avoid statutory requirements or to qualify for statutory protections. See Id.

Nor does the 381 S.W.3d at 444.

Applying the Ruttiger rule to this case, we first conclude that the Act bars the Johnsons’ claims for negligence, gross negligence, breach of contract, quantum meruit, breach of the duty of good faith and fair dealing, and statutory violations. In support of these causes of action, the Johnsons allege that Crawford failed to act reasonably in responding to the Johnsons’ claims for benefits and made and then breached promises and representations that it would pay certain benefits. Because all of these claims arise out of Crawford’s investigation, handling, and settling of the Johnsons’ claim for workers’ compensation benefits, the Act provides the exclusive procedures and remedies for these claims.

We reach the same conclusion regarding all of the Johnsons’ common law and statutory causes of action based on allegations of deception, fraud, and misrepresentation. Because we held in Id.

This case presents a question we did not expressly address in TEX. LAB. CODE § 415.002(a)(1), (13). The Act’s comprehensive system for resolving workers’ compensation claims encompasses prohibitions against fraud and misrepresentations made within the claims-settlement context, and grants the Division authority to regulate and sanction any such conduct. Because all of the Johnsons’ misrepresentation-based claims complain of misrepresentations that Crawford allegedly made in connection with its investigation, handling, and settling of the Johnsons’ claims for workers’ compensation benefits,6 we hold that the Division had exclusive jurisdiction to address those claims.

We now turn to the Johnsons’ claims for malicious prosecution and intentional infliction of emotional distress, which are both based on allegations that Crawford falsely reported to a district attorney that the Johnsons committed insurance fraud by requesting mileage reimbursements for travel that had not occurred. We hold that the Division has exclusive jurisdiction over these claims because they also arise out of Crawford’s investigation, handling, and settling of the Johnsons’ claims for workers’ compensation benefits. The mileage reimbursements at issue were part of the Johnsons’ medical benefits under the Act, and carriers are required to report suspected fraud to the Department or to an authorized governmental entity as part of their claims-handling responsibilities. 418.001. Because the Johnsons’ causes of action for malicious prosecution and intentional infliction of emotional distress arise out of Crawford’s investigation, handling, and settling of a workers’ compensation claim, we hold that the Division had exclusive jurisdiction over those complaints.7

Finally, we turn to the Johnsons’ argument that Natalie Johnson is not seeking relief as an ASARCO employee and thus her claims are independent of the Act and therefore not barred by it. Specifically, the Johnsons argue that Natalie “has causes of action for malicious prosecution, intentional infliction of emotional distress, quantum meruit, and breach of contract all of which ... do not arise under the Act because she was not an employee of ASARCO.” But Natalie’s claims, like Glenn’s, arise out of Crawford’s conduct in investigating, handling, and settling Glenn’s claim for workers’ compensation benefits. Specifically, she complains that Crawford breached promises to pay her to provide services to Glenn and that Crawford maliciously caused her to be prosecuted for insurance fraud. We have held that an employee’s spouse cannot bring a separate action alleging claims under the Act. See Reed Tool Co. v. Copelin, 610 S.W.2d 736, 738– 39 (Tex.1980). We conclude that, even if Natalie Johnson has standing to assert her claims, they fall within the Division’s exclusive jurisdiction.

Having concluded that the Division has exclusive jurisdiction over the Johnsons’ claims against Crawford, we further conclude that Crawford is entitled to mandamus relief. City of Houston v. Rhule, 417 S.W.3d 440, 442 (Tex.2013) (“Absent exhaustion of administrative remedies, a trial court must dismiss the case.”).

Pursuant to Texas Rule of Appellate Procedure 52.8(c), without hearing oral arguments, we conditionally grant mandamus relief and direct the 108th District Court to withdraw its order denying Crawford’s plea to the jurisdiction and dismiss the Johnsons’ claims for lack of subject-matter jurisdiction. Our writ will issue only if the court fails to act in accordance with this opinion.

Footnotes

1

Id. at 454.

2

See Ruttiger that the Court should not alter the Act’s comprehensive scheme, and we reaffirm that principle today.”).

3

We likewise held that the claimant could not recover on his DTPA claim because that claim, “as pled and submitted to the jury[,] depended on the validity of his Insurance Code claim[s].” Ruttiger, 381 S.W.3d at 446.

4

See, e.g., Ruttiger to hold that the Act precludes claims for common-law bad faith, statutory bad faith, fraud, and conspiracy to commit fraud based on allegations that carrier delayed paying benefits and concealed the nature of its relationship with reviewing doctor because the claims related to “the manner in which the carrier had handled the processing of [the] workers’ compensation claim”).

5

At least two courts of appeals have reached this same conclusion. See Id. at *3–*4.

6

The Johnsons allege, for example, that Crawford “made blatantly false statements to avoid coverage and to avoid paying both income and medical benefits”; made “clearly untrue statements of material facts, including withholding proper home healthcare and paying the injured worker and his spouse directly to arrange and provide necessary care”; and “failed to state and to disclose known material facts that the lifetime income benefits were payable.”

7

Because the Act’s grant of exclusive jurisdiction bars the courts from exercising jurisdiction over the claims, we reject the Johnsons’ complaints that Crawford waived its argument that the Act bars the claims for malicious prosecution and is judicially estopped from raising them on mandamus. The Johnsons contend that Crawford’s counsel “judicially admitted” in the trial court that the malicious prosecution claim “is outside of comp,” and “[c]omp has nothing to do with malicious prosecution and we’re not arguing that it does.” We need not decide whether these statements could constitute a waiver, judicial admission, or the basis for judicial estoppel, because even if they could, such doctrines cannot create subject-matter jurisdiction where it does not otherwise exist. Federal Underwriters Exch. v. Pugh, 141 Tex. 539, 174 S.W.2d 598, 600 (1943)).

End of Document
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