Last Friday, the Texas Supreme Court reversed judgment by the Court of Appeals for the Fourteenth District of Texas in a workers’ compensation suit and rendered judgment that Plaintiff take nothing.  Texas Mutual Ins. Co. v. Morris, 2012 WL 5275467, No. 09–0495 (Tex. Oct. 26. 2012) 

Plaintiff, Lance Morris, injured his back while working and his employer’s workers’ compensation insurer, Texas Mutual Insurance Company (TMIC), accepted the injury as compensable. Three years later when it was discovered that Plaintiff had herniated lumbar intervertebral discs, TMIC disputed whether they were causally related to the original injury. The Texas Department of Insurance Division of Workers’ Compensation (the division) determined that the disc herniations were related to the original injury and ordered TMIC to pay medical benefits, which it did. Morris later sued TMIC for damages caused by its delay in paying benefits. The trial court rendered judgment for Morris, and the court of appeals affirmed.

On appeal, TMIC argued (1) the trial court did not have jurisdiction over Plaintiff’s suit because he did not timely use administrative remedies available to him under the Workers’ Compensation Act for obtaining benefits; (2) Plaintiff’s causes of action for unfair claims settlement practices under Insurance Code section 541.060 and breach of the common law duty of good faith and fair dealing did not apply in the workers’ compensation context; and (3) Plaintiff could not recover under Insurance Code section 541.061 for misrepresentation of an insurance policy.

As to the first issue, the Court distinguished the instant suit from that of Am. Motorists Ins. Co. v. Fodge, 63 S.W.3d 801, 804–05 (Tex.2001), in which the Court held the trial court did not have jurisdiction over a claim for delay in providing compensation benefits if the division had not yet made a determination that the benefits  were  due.  In  Morris’s  lawsuit,  however,  the  division  had  determined  that  his  lumbar  disc herniations were compensable and that TMIC was liable for compensation. The Court concluded that Morris’s delays in requesting division action were not jurisdictional in nature, but rather were matters of whether he mitigated his damages. Thus his delays in seeking relief from the division did not deprive the trial court of jurisdiction.

As to the second issue, the Court held that Morris could not recover damages for unfair claims settlement practices under Insurance Code section 541.060 nor for breach of the common law duty of good faith and fair dealing pursuant to the Court’s recent decision in Texas Mutual Insurance Co. v. Ruttiger, ––– S.W.3d ––––, No. 08-0751 (Tex. 2012) (overruling Aranda v. Ins. Co. of N. Am., 748 S.W.2d 210, 212–13 (Tex.1988)).

Finally,  as  to  the  third  issue  on  appeal,  the  Court  found  that  there  was  no  evidence  that  TMIC believed  constituted  untrue  statements  about  or  failure  to  disclose  something  about  the  insurance policy.  Therefore, the Court held that Plaintiffs’ claim for misrepresentation under Insurance Code section 541.061 failed.

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