• Austin Court of Appeals Affirms Dismissal of EC against COMP Carrier Based on Preemption
  • November 8, 2013
  • Law Firm: Martin Disiere Jefferson Wisdom L.L.P. - Houston Office
  • Last week, the Austin Court of Appeals affirmed a trial court’s granting of summary judgment in favor of a worker’s compensation insurance carrier.  In Donna Hopper, et al. v.  Argonaut Insurance Company, et al., No. 03-12-00734-CV, Tex. App.—Austin, Oct. 18, 2013, Plaintiffs sued Argonaut Insurance Company for falsely disputing and improperly delaying processing of their claims for worker’s compensation death benefits.

    Plaintiffs were the widow and children of a worker that suffered a wrist injury in 2004.  Plaintiffs filed a claim for workers’ compensation death benefits asserting the worker became addicted to and overdosed on pain medications which had been prescribed as a result of his wrist injury.  Plaintiffs alleged Argonaut mishandled and unreasonably delayed payment of their claims by suggesting the worker intentionally overdosed on pain medication and the Plaintiffs were not the workers legal beneficiaries.  Plaintiffs further argued Argonaut failed to control the medications prescribed to the worker and failed to offer the worker a detoxification program for drug abuse, which had been recommended by his treating physician.

    Argonaut disputed Plaintiffs’ claims for benefits and filed notices of disputing coverage with the Workers’ Comp Division of the Texas Department of Insurance.  Two years after the worker’s death, the disputed claims were resolved following a Benefit Review Conference and the execution of a Benefit Dispute Agreement in which it was determined the wife and children of the worker were his intended beneficiaries, and the worker’s wrist injury was the producing cause of his death.

    After the administrative determination, Plaintiffs filed suit against Argonaut alleging common-law claims for fraud, negligent misrepresentation, unconscionability, common law bad faith, and statutory claims under the Texas Insurance Code and Deceptive Trade Practices Act (DTPA) for failure to comply with the Texas’ Comp Act.

    The trial court granted Argonaut’s Motion for Summary Judgment based on the decision in Texas Mutual Insurance Co v. Ruttiger, 381 S.W.3d 430 (Tex. 2012).  The Austin Court of affirmed the trial court’s application of Ruttiger noting the Texas Supreme Court abolished the common-law duty of good faith and fair dealing in workers’ compensation cases and held the provisions of the Comp Act govern dispute resolution and provide remedies for an insurer’s failure to comply with its provisions which are exclusive of independent causes of action based on unfair claims-settlement practices.

    The Court evaluated each of Plaintiffs’ causes of action and noted Plaintiffs’ Insurance Code claims could potentially exist had Argonaut misrepresented the terms of the policy.  However, like Ruttiger, there was no evidence of any misrepresentation of the policy.  Rather, Plaintiffs alleged Argonaut’s misrepresentations concerned whether the worker’s death resulted from a compensable injury and whether the worker’s family members were beneficiaries.  The Court concluded these disputes were resolved during the administrative BRC.

    The Court also applied the holding in Ruttiger to Plaintiffs’ common-law claims for fraudulent and negligent misrepresentation because there was no evidence of fraudulent or negligent conduct outside of the claim-settlement process.  The Court noted that the Worker’s Compensation Act effectively eliminated the need for judicially imposed causes of action outside of the administrative process.  The Court further held that because the Plaintiffs’ claims and supporting evidence were limited to complaints about delays, claim handling and complaints regarding the entitlement of benefits, and because Ruttiger eliminated all common law causes of action in this area, summary judgment was proper.