Opinion issued January =
17, 2008=20
Appellant,=20
Texas Mutual Insurance Company ("TMI"), challenges the trial =
court's=20
judgment, entered after a jury trial, in favor of appellee, =
Timothy J.=20
Ruttiger, in Ruttiger's suit for violations of the Texas Insurance =
Code, TMI brings eight =
issues for=20
our review. In its first three issues, TMI contends that the =
evidence is=20
legally insufficient to support the jury's findings that TMI =
violated the=20
Insurance Code by engaging in unfair and deceptive acts or =
practices,=20
breached the common law duty of good faith and fair dealing, =
violated the=20
DTPA, and "knowingly" engaged in unfair and deceptive acts or =
practices.=20
In its fourth, fifth, and sixth issues, TMI contends that the =
trial court=20
erred in awarding damages for physical pain and suffering, =
physical=20
impairment, and mental anguish as "such damages were not separate =
and=20
independent from the underlying physical injury" and that the =
evidence is=20
legally insufficient to support the awards for mental anguish and=20
loss of=20
credit reputation. In its seventh issue, TMI contends that the =
trial court=20
lacked jurisdiction to award damages because Ruttiger "failed to =
obtain a=20
finding by the Texas Workers' Compensation Commission [("TWCC")] =
that he=20
was entitled to workers' compensation benefits." In its eighth =
issue, TMI=20
contends that no cause of action exists in Texas for breach of the =
duty of=20
good faith and fair dealing in the context of a workers' =
compensation=20
claim. We modify=20
the judgment to delete that portion of the judgment awarding =
Ruttiger=20
damages for his loss of credit reputation. We affirm the judgment =
of the=20
trial court as modified. Factual and Procedural=20
Background In his=20
petition, Ruttiger alleged that, on June 21, 2004, he sustained =
bilateral=20
inguinal hernias In its=20
seventh issue, TMI argues that the trial court lacked subject =
matter=20
jurisdiction because Ruttiger "failed to obtain a finding by the =
[TWCC]=20
that he was entitled to workers' compensation benefits." It =
asserts that=20
Texas courts have no jurisdiction to award damages against an =
insurer for=20
a "denial in payment of compensation benefits without a =
determination by=20
the TWCC that such benefits [are] due." TMI contends that the =
Benefit=20
Dispute Agreement was merely a compromise, not a determination by =
the TWCC=20
as to whether Ruttiger was entitled to workers' compensation =
benefits, and=20
treating it as a TWCC determination would permit "the parties to =
create=20
subject matter jurisdiction" and would result in a "chilling =
effect" on=20
settlements. This Court=20
has previously considered, and rejected, similar arguments. In =
In re=20
Texas Workers' Compensation Insurance Fund, a claimant =
sustained an=20
injury in the course and scope of his employment, and the workers' =
compensation carrier initially paid him medical and income =
benefits. 995=20
S.W.2d 335, 335 (Tex. App.--Houston [1st Dist.] 1999, no pet.). =
The=20
parties then entered into their first benefit dispute agreement, =
agreeing=20
that certain medical problems were "causally related" and that the =
insurer=20
would pay "reasonable and necessary medical." Id. at 336. =
However, the insurer subsequently began denying payments, and the =
parties=20
entered into two additional benefit dispute agreements, with the =
insurer=20
agreeing to pay the claimant supplemental income benefits for =
specific=20
amounts. Id. Prior to entering into the third agreement, =
the=20
claimant sued the insurer, alleging that the insurer failed to =
timely pay=20
the benefits that it had agreed to pay. Id. The insurer =
argued=20
that the claimant failed to exhaust his administrative remedies.=20
Id. We disagreed. Id. We noted=20
that the Texas Workers' Compensation Act (the "Act") The=20
statutory scheme specifically provides that "the division shall =
schedule a=20
contested case hearing . . . if the disputed issues are not =
resolved=20
at the benefit review conference." Id. =A7 410.025 =
(Vernon=20
2006) (emphasis added). Furthermore, "[a] dispute may be =
resolved=20
in whole or in part at a benefit review conference," and, =
following=20
the conclusion of the benefit review conference, the benefit =
review=20
officer shall reduce the agreement to writing to be signed by the =
officer=20
and each party. Id. =A7 410.029(a) (Vernon 2006). This =
agreement=20
"is binding on the insurance carrier through the =
conclusion=20
of all matters relating to the claim, unless the commission =
or a=20
court, on a finding of fraud, newly discovered evidence, or other =
good or=20
sufficient cause, relieves the insurance carrier of the effect of =
the=20
agreement." Id. =A7 410.030(a) (Vernon 2006) (emphasis =
added). "If=20
a dispute is not entirely resolved . . . , the benefit =
review=20
officer shall prepare a written report that details each issue =
that is not=20
resolved at the conference." Id. =A7 410.031(a) (Vernon =
2006)=20
(emphasis added). Under the=20
plain language of the Act, the TWCC, the claimant, and the =
insurance=20
provider can enter into a binding written agreement that resolves =
all=20
disputed issues. The Act does not require a claimant, who has =
entered into=20
a binding written agreement to settle his benefits dispute, to =
continue=20
through all four tiers of the disposition process. See In re =
Texas=20
Workers' Compensation Ins. Fund, 995 S.W.2d at 336-37. Here, the=20
parties signed the Benefit Dispute Agreement, agreeing that =
Ruttiger=20
sustained a compensable injury in the form of a hernia on June 21, =
2004=20
and suffered from a disability for a certain time. The Benefit =
Dispute=20
Agreement provided that it "shall be complied with within five =
days of the=20
approved agreement being received by the carrier." Accordingly, we =
hold=20
that the Benefit Dispute Agreement constituted a final =
determination that=20
benefits were due to Ruttiger and that the trial court had subject =
matter=20
jurisdiction to hear Ruttiger's case. In support=20
of its argument that the trial court did not have subject matter=20
jurisdiction, TMI relies on American Motorists Insurance =
Company v.=20
Fodge, 63 S.W.3d 801 (Tex. 2001). However, Fodge is=20
substantively distinguishable. In Fodge, the carrier =
initially=20
denied the claimant compensation benefits. Id. at 802. =
However,=20
after an officer at a contested case hearing found that Fodge had =
suffered=20
a compensable injury, she and the carrier stipulated that her =
disability=20
lasted 20 days, the hearing officer ordered payment of temporary =
income=20
benefits, and the carrier complied. Id. Fodge never =
sought or=20
complained about the carrier's denial of medical benefits. =
Id.=20
She then sued the carrier, alleging that the carrier had denied =
and=20
delayed payment for medical benefits, had underpaid and delayed =
payment of=20
the awarded income benefits, and had failed to pay her additional =
income=20
benefits that were never awarded. Id. The carrier filed a =
motion=20
to dismiss, arguing that the claims were based on a denial of =
benefits=20
that only the TWCC has jurisdiction to award. Id. at=20
803. The Texas=20
Supreme Court held that, regarding Fodge's claims for "benefits =
due" and=20
for damages caused by the insurer's bad faith "denial" of =
additional=20
benefits never awarded, her "failure to obtain a commission ruling =
entitling her to [those] benefits [was] dispostive." Id. =
Because=20
the TWCC had paid Fodge all of the benefits awarded to her under =
the=20
agreement, the trial court had no jurisdiction to hear her claims =
for=20
additional benefits or for damages caused by a bad faith denial of =
additional benefits. Id. at 804. The court explained that =
because=20
"only the [TWCC] can determine a claimant's entitlement" to =
benefits,=20
allowing courts to award damages for wrongful deprivation of =
benefits to=20
which a claimant was not entitled "would circumvent the [TWCC's]=20
jurisdiction." Id. However, regarding the claims for the=20
carrier's bad faith delay in the payment of compensation benefits=20
ultimately stipulated to by the carrier, the court concluded that =
they=20
were "ripe for adjudication and should not have been dismissed."=20
Id. at 805. Similar to these "ripe" claims in =
Fodge,=20
Ruttiger has alleged that TMI committed bad faith in delaying =
payment of=20
benefits that it ultimately agreed to pay in the Benefit Dispute=20
Agreement. Thus, a careful reading of Fodge supports our =
holding=20
that the trial court had subject matter jurisdiction to hear the =
instant=20
claims. We overrule TMI's =
seventh=20
issue.Insurance Code Violations In its first =
issue, TMI=20
argues that the evidence is legally insufficient to support the =
jury's=20
finding that TMI violated the Texas Insurance Code by engaging in =
unfair=20
and deceptive acts or practices because the facts "conclusively =
prove that=20
TMI had a reasonable basis to dispute Ruttiger's claim, and there =
is no=20
evidence that a reasonable insurer would have concluded, based on =
all the=20
information available, that coverage was reasonably =
clear." Because TMI=20
did not have the burden of proof at trial, it must demonstrate =
that there=20
is no evidence to support the jury's adverse finding. =
Scottsdale Ins.=20
Co. v. Nat'l Emergency Servs., Inc., 175 S.W.3d 284, 300 =
(Tex.=20
App.--Houston [1st Dist.] 2004, pet. denied). If more than a =
scintilla of=20
evidence supports the finding, the no-evidence challenge fails.=20
Tarrant Reg'l Water Dist. v. Gragg, 151 S.W.3d 546, 552 =
(Tex.=20
2004). "More than a scintilla of evidence exists where the =
evidence=20
supporting the finding, as a whole, rises to a level that would =
enable=20
reasonable and fair-minded people to differ in their conclusions." =
Id. We will sustain a legal sufficiency or "no-evidence"=20
challenge if the record shows one of the following: (1) a =
complete=20
absence of evidence of a vital fact, (2) rules of law or evidence =
bar the=20
court from giving weight to the only evidence offered to prove a =
vital=20
fact, (3) the evidence offered to prove a vital fact is no more =
than a=20
scintilla, or (4) the evidence conclusively establishes the =
opposite of=20
the vital fact. City of Keller v. Wilson, 168 S.W.3d 802, =
810=20
(Tex. 2005). In conducting a legal sufficiency review, a court =
must=20
consider evidence in the light most favorable to the verdict and =
indulge=20
every reasonable inference that would support it. Id. at =
822. If=20
the evidence allows only one inference, neither jurors nor the =
reviewing=20
court may disregard it. Id. However, if the evidence at =
trial=20
would enable reasonable and fair-minded people to differ in their=20
conclusions, then jurors must be allowed to do so. Id. A=20
reviewing court cannot substitute its judgment for that of the=20
trier-of-fact, so long as the evidence falls within this zone of=20
reasonable disagreement. Id. In=20
accordance with sections 541.060 and 541.061 of the Insurance =
Code, (1) making=20
any misrepresentation of an insurance policy by (a) making an =
untrue=20
statement of fact; (2) engaging in =
the=20
following unfair settlement practices with respect to a claim by =
an=20
insured by (a) misrepresenting to a claimant a material fact or =
policy=20
provision; The jury answered =
"yes" to=20
this single, broad-form question. On appeal, TMI challenges the =
legal=20
sufficiency of the evidence supporting the jury's affirmative =
findings on=20
all theories. In addition=20
to committing an unfair and deceptive act by violating subsections =
(a)(2)=20
and (a)(7) of section 541.060, an insurer breaches its duty of =
good faith=20
and fair dealing by denying or delaying payment of a claim if the =
insurer=20
knew or should have known it was reasonably clear the claim was =
covered.=20
Universe Life Ins. Co. v. Giles, 950 S.W.2d 48, 49 (Tex. =
1997);=20
see also Travelers Personal Sec. Ins. Co. v. McClelland, =
189=20
S.W.3d 846, 852 (Tex. App.--Houston [1st Dist.] 2006, no pet.) =
(stating=20
that, under Insurance Code, "insurer violates its duty of good =
faith and=20
fair dealing by denying or delaying payment of a claim when the =
insurer=20
knew or should have known that it was reasonably clear that the =
claim was=20
covered" and that "an insurer cannot shield itself from bad-faith=20
liability by investigating a claim in a manner calculated to =
construct a=20
pretextual basis for denying a claim"); Lundstrom v. United =
Servs.=20
Auto. Ass'n-CIC, 192 S.W.3d 78, 96 (Tex. App.--Houston [14th =
Dist.]=20
2006, pet. denied) (same); United Servs. Auto. Ass'n v. =
Croft,=20
175 S.W.3d 457, 471-72 (Tex. App.--Dallas 2005, no pet.) ("The =
common-law=20
duty of good faith and fair dealing is breached when an insurer =
denies or=20
delays payment of a claim after its liability has become =
reasonably=20
clear."). As part of its =
common law=20
duty, and as codified in the Insurance Code, an insurer has an =
obligation=20
to conduct an adequate investigation before denying a claim.=20
Croft, 175 S.W.3d at 472 The Texas=20
Supreme Court has recently highlighted the appropriate legal =
sufficiency=20
standard of review to be applied in insurance bad-faith cases. =
See=20
Minnesota Life Ins. Co. v. Vasquez, 192 S.W.3d 774, 777 (Tex. =
2006).=20
The court explained that, in such cases, coverage will "almost =
always be=20
reasonably clear if reviewing courts must disregard all evidence =
that=20
[coverage] was unclear." Id. Thus, appellate courts =
should "look=20
at all the evidence in such cases, crediting favorable evidence if =
reasonable jurors could, and disregarding contrary evidence unless =
reasonable jurors could not." Id. Here, the=20
parties agree that once TMI began paying Ruttiger temporary =
benefits in=20
late June 2004, TMI had secured 60 days from the date that it was =
notified=20
of Ruttiger's injury to continue to investigate or deny him =
compensation=20
for his injuries. See Tex. Lab. Code Ann. =A7 409.021 =
(Vernon Supp.=20
2007). Beyond this, most of the critical facts are hotly =
contested.=20
Ruttiger=20
testified that, during the weekend prior to his injury, he coached =
at his=20
daughter's softball tournament and that he suffered no pains or =
problems.=20
On June 21, 2004, he returned to work, and he and his supervisor, =
David=20
Martin, went to a jobsite. Ruttiger picked up a load of metal =
conduit,=20
weighing approximately 40-50 pounds, and stumbled over a board in =
a=20
doorway. The load shifted, and Ruttiger immediately felt burning =
pain.=20
Ruttiger told Martin "what happened" and that he needed medical =
attention.=20
After Martin told Ruttiger that they could not leave the job site, =
Ruttiger arranged for his wife to take him to the University of =
Texas=20
Medical Branch-Galveston ("UTMB"). There, Dr. Pamela Havlen, who =
had an=20
immediate opening, examined Ruttiger and diagnosed him as =
suffering from=20
two hernias, "one on each side." When a=20
nurse asked Ruttiger about payment, he called A&H and spoke =
with April=20
Beall, A&H's owner, and she told him to "file it on Workers' =
Comp."=20
She also gave him a policy number to provide to the nurse. =
Pursuant to=20
Beall's instructions, Ruttiger stopped by A&H's office on his =
way home=20
and filled out a form entitled "Employer's First Report of Injury =
or=20
Illness." Ruttiger wrote in the form that he was injured "carrying =
heavy=20
pipes to a jobsite." Ruttiger also identified his doctor as "Dr. =
William=20
Harper, UTMB." Beall signed the form in Ruttiger's presence. =
Dr. Havlen=20
referred Ruttiger to Dr. Thomas Kimbrough, and, on July 2, 2004, =
Kimbrough=20
examined Ruttiger. In his notes, Kimbrough wrote that Ruttiger =
"was=20
carrying pipe at work," stumbled and felt a burning pain on his =
left=20
side,"noticed a bulge on that side," "sought medical attention," " =
and was=20
discovered to [also] have a smaller bulge on the right." Kimbrough =
also=20
noted that Ruttiger's "left side is still tender," he "has not =
ever had=20
bulges in this area prior to his accident at work," and he has had =
no=20
previous operations. Kimbrough detailed Ruttiger's symptoms, =
diagnosed him=20
with bilateral inguinal hernias, and scheduled surgery for July =
14,=20
2004. Ruttiger=20
further testified that after Dr. Kimbrough's examination, neither =
A&H=20
nor TMI contacted him further and he did not anticipate any =
problems with=20
receiving his benefits. However, shortly before his scheduled =
surgery,=20
Kimbrough's office called him and told him that TMI had "cancelled =
everything." Ruttiger then made a telephone call to TMI and spoke =
with=20
Audie Culbert, the TMI adjuster assigned to Ruttiger's case. =
During this=20
conversation, Culbert told Ruttiger that TMI cancelled his =
benefits=20
because Ruttiger "was hurt playing softball and not hurt on the =
job."=20
Ruttiger tried to explain to Culbert that he did not play softball =
and,=20
instead, only coached his daughter's team. Ruttiger maintained =
that he was=20
"hurt on the job," and Culbert replied, "that's not what I'm =
hearing," and=20
hung up the telephone. No one from TMI contacted Ruttiger again, =
and=20
Ruttiger, who remained "sore and swollen," hired a lawyer. =
In=20
contrast, Culbert testified that after receiving the claim, he, on =
June=20
28, 2004, contacted April Beall, and "she had a lot of questions =
about=20
this claim." Although Ruttiger had completed the injury report =
form at=20
A&H's office on the day of his injury, Beall told Culbert that =
Ruttiger had not reported an on-the-job injury. Beall also stated =
that=20
Ruttiger had taken off work on June 17-18, 2004 to go to a =
softball game.=20
She told Culbert that Henry Beall, her relative and an A&H =
employee,=20
had told her that Ruttiger came to work on June 21, 2004 limping, =
and=20
David Martin, Ruttiger's supervisor, told her that he "was never =
told of=20
any accident." April Beall claimed that Ruttiger was not at work =
on a=20
regular basis, and she did not believe Ruttiger was injured on the =
job.=20
Culbert wrote in his notes that Ruttiger was "allegedly carrying =
some=20
heavy pipes," and identified the "compensable injury" as a =
"possible=20
hernia." That same=20
day, Culbert unsuccessfully attempted to contact Ruttiger twice at =
a phone=20
number provided by A&H, he sent Ruttiger a letter requesting =
that=20
Ruttiger contact him at a 1-800 number, and he attempted to =
contact Dr.=20
William Harper at UTMB, the doctor identified on Ruttiger's injury =
report=20
form. Culbert wrote in his notes, "I will try to get [Harper's =
telephone=20
number] from employee once I speak with him." According to =
Culbert,=20
Ruttiger never responded to his contact attempts. Culbert=20
further testified that, on July 7, 2004, he spoke with Henry Beall =
and=20
recorded his statement, which was the only recorded statement =
Culbert=20
obtained during his investigation prior to TMI's filing of its =
notice=20
disputing Ruttiger's claim. In his statement, contrary to April =
Beall's=20
previous representations, Henry Beall agreed that Ruttiger had =
informed=20
both him and Martin that he had been injured on the job. However, =
Henry=20
Beall subsequently contradicted himself in the same statement, =
claiming=20
that Ruttiger had not reported any accident "on the job" and that =
Ruttiger=20
did not follow proper procedure. In regard to the softball game, =
Henry=20
Beall stated that he was not "totally positive" as to whether =
Ruttiger had=20
been playing softball or coaching his daughter's team. Henry Beall =
conceded that he did not "have verification" about the softball =
game. In=20
regard to whether Ruttiger arrived at work on June 21, 2004 with a =
limp,=20
Henry Beall was not "100%" sure and "couldn't say he was actually=20
limping." During the statement, Culbert specifically asked Henry =
Beall if=20
he had the name of Ruttiger's doctor. After referring to a letter =
in his=20
possession, Henry Beall supplied Culbert with the name of =
Ruttiger's=20
doctor. Culbert, on=20
July 8, 2004, again spoke with April Beall, who repeated that one =
of=20
Ruttiger's co-workers told her that Ruttiger got hurt playing =
softball and=20
that Ruttiger had "bragged about getting it paid by Worker's=20
Compensation." She stated that this co-worker would provide =
Culbert with a=20
recorded statement on July 9, 2004. However, Culbert did not take =
any=20
recorded statements on July 9, 2004. On July 12, 2004, Culbert =
again spoke=20
with April Beall, and she reiterated that Ruttiger had played =
softball on=20
June 20, 2004, "and then came to work and claimed he was injured." =
She=20
also told Culbert that Ruttiger had told his co-worker, "Adam," =
that he=20
"was happy that he was getting his hernia repaired by Woker's=20
Compensation/employer." On July 12,=20
2004, UTMB contacted Culbert seeking preauthorization for =
Ruttiger's=20
surgery. During this call, Culbert agreed that he did not ask UTMB =
for any=20
medical records and did not ask for the names of any of Ruttiger's =
doctors. Culbert denied the preauthorization and, that same day, =
filed a=20
"Notice of Refused or Disputed Claim," stating, The carrier=20
disputes this claim in its entirety. The claimant did not sustain =
a=20
compensable injury. The claimant did not sustain an injury in the =
course=20
and scope of employment. Our investigation revealed that the =
[employee]=20
was playing softball and sustained a hernia. Despite his=20
affirmative statements in this notice, In regard=20
to Culbert's efforts to obtain the names of Ruttiger's treating =
doctors=20
and medical information, Culbert stated that he "had the wrong =
doctor's=20
name" and that A&H did not have any accurate medical =
information. The=20
evidence established that Ruttiger identified Dr. Harper as his =
treating=20
physician on his injury report form. Culbert stated =
that his=20
effort to locate Dr. Harper consisted of looking on the Internet, =
and=20
Culbert agreed that he did not contact UTMB directly and did not =
send any=20
medical record requests to UTMB. When Culbert received a telephone =
call=20
from UTMB seeking preauthorization for Ruttiger's surgery, Culbert =
made no=20
inquiries about the names of the treating doctors, the extent of=20
Ruttiger's injuries, or Ruttiger's contact information. Although =
Culbert=20
defended his lack of investigation, stating that he needed =
Ruttiger's=20
medical authorization to obtain medical information, he, under =
further=20
questioning, appeared to equivocate on this defense. To the=20
extent that, in some circumstances, an insurer might be justified =
in=20
relying solely upon information obtained from an employer, a =
reasonable=20
juror could have believed that, under the circumstances presented =
in this=20
case, Culbert should have been highly suspect of the veracity of =
the=20
unsubstantiated allegations he was hearing from April Beall at =
A&H.=20
For example, she suggested in her first contact with Culbert that =
Ruttiger=20
never reported an on-the-job injury. Yet, this representation was =
flatly=20
contradicted by the injury report form filled out by Ruttiger, =
signed by=20
April Beall, and provided to Culbert. April Beall's repeated =
allegations=20
that Ruttiger was injured in a softball game, which served as the =
only=20
specific basis for TMI's dispute, were never verified. Her =
representations=20
that Henry Beall had told her that Ruttiger came to work limping =
on the=20
day of the injury were not supported by Henry Beall. Additionally, =
Henry=20
Beall made contradictory statements regarding whether Ruttiger =
even timely=20
reported an on-the-job injury on the day of the injury. Given the=20
evidence, no reasonable juror could have doubted that Ruttiger =
timely=20
reported his injury. Finally, April Beall's promise to provide =
Culbert a=20
recorded statement from a co-worker to confirm that Ruttiger was =
seeking=20
compensation for an off-the-job injury never materialized. In sum, =
a=20
reasonable juror could have believed that Culbert made his =
decision to=20
deny Ruttiger's claim after conducting an extremely limited, =
one-sided=20
investigation that produced nothing more than highly suspicious =
rumors and=20
speculation from two, related employer representatives. =
Considering this=20
evidence, as well as Ruttiger's direct testimony that he had, in =
fact,=20
suffered an on-the-job-injury, a reasonable juror could have found =
that,=20
at the time TMI denied Ruttiger's claim, coverage for Ruttiger's =
injuries=20
had become reasonably clear. Based on=20
our review of all of the evidence, we hold that the evidence is =
legally=20
sufficient to support the jury's finding that TMI violated the =
Insurance=20
Code and engaged in unfair settlement practices by failing to =
attempt in=20
good faith to effectuate a prompt, fair, and equitable settlement =
of a=20
claim with respect to which its liability had become reasonably =
clear and=20
by refusing to pay a claim without conducting a reasonable =
investigation=20
with respect to the claim. In support=20
of its legal sufficiency challenge, TMI asks us to consider =
additional=20
information developed by TMI after filing its July 12, 2004 =
dispute. We=20
note that "[w]hether there is a reasonable basis for denial, . . . =
must be=20
judged by the facts before the insurer at the time the claim was =
denied."=20
Viles v. Security Nat. Ins. Co., 788 S.W.2d 566, 567 =
(Tex. 1990).=20
However, we recognize that TMI's post-denial evidence may be =
relevant=20
because there can be no claim for bad faith when an insurer has =
denied a=20
claim that is, in fact, not covered and the insurer has not =
otherwise=20
breached the contract. See Republic Ins. Co. v. Stoker, =
903=20
S.W.2d 338, 340-41 (Tex. 1995). After=20
Ruttiger's attorney contacted Culbert in September 2004, TMI =
reopened the=20
file and conducted an additional investigation. On September 21, =
2004,=20
Culbert obtained a recorded statement from Adam Popovich, who =
stated that=20
Ruttiger had "that hernia for a long time" and Ruttiger had told =
him that=20
he did not sustain a hernia at A&H. However, Popovich, in his=20
statement, did not conclusively establish that Ruttiger's prior =
hernia=20
injury was what Ruttiger was seeking compensation for, and =
Popovich's=20
statement did not foreclose the possibility that Ruttiger had =
aggravated=20
this pre-existing hernia. Culbert conceded that Ruttiger still =
would have=20
sustained a compensable injury if he had aggravated a preexisting =
hernia.=20
See City of Pasadena v. Olvera, 95 S.W.3d 494, 497 (Tex.=20
App.--Houston [1st Dist.] 2002, no pet.) (stating that definition =
of=20
injury "includes aggravation of a pre-existing condition"). =
Culbert, on=20
December 17, 2004, also obtained a statement from David Martin, =
who opined=20
that Ruttiger was not actually injured on the job. Ruttiger never =
told=20
Martin that he was injured on the job, and Martin felt Ruttiger =
was=20
"[t]rying to pull the wool over somebody's eyes." On the other =
hand,=20
Martin also stated that he would be surprised if Ruttiger suffered =
from a=20
hernia prior to June 21, 2004. Neither Popovich nor Martin =
provided any=20
evidence that Ruttiger suffered the injury playing =
softball. We note=20
that, even after TMI obtained Popovich's and Martin's statements, =
TMI=20
entered into the Benefit Dispute Agreement with Ruttiger, agreeing =
that=20
Ruttiger sustained a compensable injury in the form of bilateral =
inguinal=20
hernias on June 21, 2004. Thus, this case is unlike those cases in =
which a=20
party has complained of damages caused by bad faith delay in =
payment of=20
benefits that were determined to never have been due. See=20
Lundstrom, 192 S.W.3d at 96. We also note that Ruttiger's =
testimony=20
directly contradicts Popovich's and Martin's statements, and a =
reasonable=20
juror, for the reasons cited above, could have been skeptical of =
at least=20
some of the information contained in their statements. Finally,=20
after Ruttiger filed the instant suit, TMI discovered records from =
UTMB=20
indicating that Dr. Harper had, in fact, diagnosed Ruttiger with =
bilateral=20
inguinal hernias and referred him to surgery to correct the =
hernias in=20
1998. But Ruttiger provided testimony disputing TMI's trial theory =
that=20
Ruttiger's hernias constituted nothing more than a preexisting =
condition.=20
When asked about his medical records, Ruttiger contended that he =
had only=20
learned of his 1998 hernia diagnosis in the course of this =
lawsuit, the=20
pain caused by his injury in 2004 was like nothing that he had =
ever=20
experienced, and he had never noticed any bulges before the =
injury.=20
Ruttiger also presented some evidence from his 1998 medical =
records=20
indicating that any previous hernia may have been asymptomatic and =
that he=20
did not suffer from any major pain at that time. Thus, any =
evidence that=20
Ruttiger had a preexisting hernia does not establish that Ruttiger =
did not=20
sustain a compensable injury in 2004. A reasonable juror, in =
determining=20
whether TMI violated the Insurance Code, could have rejected the =
evidence=20
developed by TMI after it had already denied Ruttiger's claim. =
See=20
City of Pasadena, 95 S.W.3d at 497. The evidence obtained by =
TMI=20
after filing its July 12, 2004 dispute does not render the =
evidence=20
supporting the jury's findings that TMI violated the Insurance =
Code=20
legally insufficient. We overrule=20
TMI's first issue. In its=20
third issue, TMI argues that the evidence is legally insufficient =
to=20
support the jury's finding that TMI "knowingly" violated the =
Insurance=20
Code becauase "the uncontroverted evidence shows that TMI and its=20
representatives subjectively believed Ruttiger's claim was not =
valid." The=20
trial court asked the jury, in question number two, whether TMI =
knowingly=20
engaged in violations of the Insurance Code. In accordance with =
section=20
541.002 of the Insurance Code, "Knowingly" means =
actual=20
awareness of the falsity, unfairness, or deceptiveness of the act =
or=20
practice described in Question 2. Actual awareness may be inferred =
if=20
objective manifestations indicate that a person acted with actual=20
awareness. The jury answered =
"yes" to=20
this question, and, based on their affirmative answer, awarded =
Ruttiger=20
$100,000 for past mental anguish and $20,000 in additional =
damages, both=20
of which are recoverable only if the Insurance Code violation was=20
committed knowingly. See Vazquez, 192 S.W.3d at =
777. The Texas =
Insurance Code=20
does not allow policyholders to recover extra-contractual damages =
when=20
insurers are merely negligent Here,=20
Ruttiger presented evidence that TMI did not attempt to contact =
him during=20
the course of its investigation, or, at best, made only minimal =
efforts to=20
do so. The jury was presented with evidence that Culbert relied =
solely=20
upon April Beall's unverified statements that Ruttiger had been =
injured=20
while playing softball, not on the job. More specifically, the =
jury heard=20
evidence that although TMI expressly denied coverage on the ground =
that=20
Ruttiger was injured playing softball, Henry Beall, an A&H =
employee=20
and the alleged source of this information, did not confirm it. =
Culbert=20
conceded that he did not speak with anyone who could confirm that =
Ruttiger=20
was injured playing softball. Most significant to the jury's =
"knowingly"=20
finding, Ruttiger testified that when he called Culbert to explain =
his=20
side of the story, Culbert hung up on him and refused to listen to =
his=20
version of events. Although Culbert denied this, the jury was =
entitled not=20
to believe Culbert. See City of Keller, 168 S.W.3d at =
811. Given=20
Ruttiger's evidence that Culbert deliberately refused to speak =
with him,=20
the evidence that Culbert made little to no effort to contact =
Ruttiger or=20
his treating doctors prior to disputing his claim, and the =
evidence that=20
Culbert instead chose to rely upon an unverified rumor supplied by =
A&H, the jury could have reasonably inferred that TMI was not =
merely=20
negligent, but instead knowingly engaged in unfair acts that gave =
rise to=20
its liability. Again, actual awareness "may be inferred if =
objective=20
manifestations indicate that a person acted with actual =
awareness."=20
See Tex. Bus. & Com. Code Ann. =A7 17.45(9). The jury =
could=20
have reasonably concluded that TMI "knowingly" failed to attempt =
in good=20
faith to effectuate a prompt, fair, and equitable settlement of a =
claim=20
with respect to which its liability had become reasonably clear =
and=20
refused to pay a claim without conducting a reasonable =
investigation. As=20
summarized by Ruttiger's insurance expert at trial, by disputing=20
Ruttiger's claim, Culbert was certifying that the statements =
contained in=20
his notice of dispute were "backed up by a reasonable =
investigation."=20
Here, however, as further noted by Ruttiger's expert, there was =
evidence=20
supporting an implied finding that TMI "used a reason to deny the =
claim"=20
that simply was not supported by the facts. Moreover,=20
as noted by Ruttiger, the jury was entitled to believe that =
Culbert's=20
subsequent investigation into any preexisting injury suffered by =
Ruttiger=20
was merely an attempt to justify Culbert's prior dispute of =
Ruttiger's=20
claim. The jury could have reasonably concluded that this =
post-dispute=20
investigation was not conducted to determine whether Ruttiger's=20
preexisting condition actually disqualified him from workers' =
compensation=20
coverage. In fact, Culbert conceded that, according to TMI's own=20
standards, TMI needed "extremely persuasive medical opinions" to =
deny=20
coverage based on a preexisting medical condition. He further =
agreed that,=20
as of the date of trial, TMI did not have any extremely persuasive =
medical=20
opinions establishing this defense. We overrule=20
TMI's third issue. In its=20
fourth and fifth issues, TMI argues that the trial court erred in =
awarding=20
Ruttiger damages for physical pain and suffering, physical =
impairment, and=20
mental anguish because "such damages were not separate and =
independent=20
from the underlying physical injury for which Ruttiger sought and =
received=20
workers' compensation benefits." TMI asserts that "physical pain =
and=20
suffering, physical impairment, and mental anguish directly relate =
to=20
Ruttiger's physical injury, i.e., the bilateral inguinal hernia =
for which=20
he sought and received workers' compensation coverage." =
Alternatively, TMI=20
asserts that even if such damages are recoverable, the evidence is =
legally=20
insufficient to support the jury's award for past mental anguish. =
In=20
regard to whether damages for physical pain and suffering, =
physical=20
impairment, and mental anguish are recoverable in the instant =
case, both=20
parties rely on Aranda v. Insurance Company of North =
America, 748=20
S.W.2d 210, 214 (Tex. 1988). In Aranda, two workers' =
compensation=20
carriers agreed that a covered employee suffered compensable =
injuries, but=20
both carriers refused to pay benefits because they could not agree =
"as to=20
which carrier bore primary responsibility." Id. at 211. =
The=20
supreme court noted that injured employees rely on the carrier for =
disability benefits and medical expenses, are "dependent on the =
carrier=20
for protection from the economic calamity of disabling =
injuries,"=20
and are otherwise without any "immediate recourse" for an =
arbitrary denial=20
of a valid claim. Id. at 212 (emphasis added). Thus, the =
court=20
recognized that a carrier has a duty "to deal fairly and in good =
faith=20
with injured employees" in processing their claims. Id. =
at=20
212-13. The court concluded that, although the carrier's =
unreasonable=20
failure to pay benefits might be rectified through administrative=20
procedures, injured employees "may in the interim incur =
substantial=20
damages because of an inability to meet basic living expenses =
or pay=20
for medical care." Id. at 212 (emphasis added). =
The supreme=20
court, in Aranda, also rejected the carriers' argument =
that the=20
exclusivity provision of the TWCA barred the employee's claims, =
noting=20
that "[a] claimant is permitted to recover when he shows that the=20
carrier's breach of the duty of good faith and fair dealing or the =
carrier's intentional act is separate from the compensation =
claim and=20
produced an independent injury." Id. at 214 =
(emphasis=20
added). The court reasoned that the remedies afforded by the TWCA =
"are=20
exclusive only if the injury complained of is an injury =
contemplated by=20
the Act--a personal injury sustained in the course of=20
employment," and, thus, the exclusivity provision of the TWCA =
"cannot=20
be read as a bar to a claim that is not based on a job-related =
injury."=20
Id. In regard to the specific claims asserted in =
Aranda,=20
the court noted that the claimant alleged a breach of the duty of =
good=20
faith and fair dealing "that was separate from his compensation =
claim for=20
his work-related disability" and that the claimant's alleged =
damages=20
caused by the carrier's failure to pay benefits included "losses =
to=20
credit, reputation, and the ability to maintain a job when his =
credit was=20
a matter of consideration for his employer." Id. =
Citing=20
Aranda, the Dallas Court of Appeals has more recently =
considered=20
the recovery of damages against a workers' compensation carrier =
for=20
denying and delaying payment of benefits. See Hulshouser v. =
Tex.=20
Workers' Compensation Ins. Fund, 139 S.W.3d 789, 790 (Tex.=20
App.--Dallas 2004, no pet.). Hulshouser sued the carrier for bad =
faith,=20
asserting that its denial and delay in compensating him for a =
hernia=20
injury aggravated that condition. Id. Specifically, he =
alleged=20
that the carrier's unreasonable denial and delay in paying =
benefits=20
resulted in permanent disability and pain that would not have =
occurred had=20
he received timely medical treatment. Id. Hulshouser =
further=20
alleged that he suffered and would continue to suffer severe =
physical and=20
mental pain, suffering, anguish, impairment, loss of earning =
capacity, and=20
loss of credit. Id. at 790-91. The trial court granted =
the=20
carrier partial summary judgment on the ground that the =
exclusivity=20
provision of the TWCA barred "the claim for common law damages =
related to=20
the hernia condition." Id. at 791. In=20
considering the types of recoverable damages, the Dallas =
Court of=20
Appeals noted that, in exchange for prompt remuneration to an =
employee for=20
an on-the-job injury, the TWCA provides the exclusive remedy for=20
on-the-job injuries and prohibits the employee from seeking =
common-law=20
remedies from his employer. Id. at 792. The court stated =
that it=20
"was undisputed that the compensable hernia-related damages =
included those=20
stemming directly from the allegedly worsened hernia injury, =
complications=20
from delayed surgery, and increased impairment." Id. at =
793. The=20
court affirmed the trial court's dismissal of Hulshouser's claims =
for=20
damages for his aggravated physical condition resulting from the =
insurer's=20
denial and delay in payment of benefits. In doing so, it held that =
"the=20
damages at issue directly related to the hernia condition, and =
that any=20
delay of the [carrier] did not produce an 'independent injury' as =
that=20
term is used in Aranda." Id. Although=20
the Dallas Court of Appeals focused on the fact that because the =
TWCA=20
affords an employee prompt remuneration with no burden of proof as =
to=20
negligence, the TWCA actually prohibits the employee from seeking=20
common-law remedies "against [his] employer or an agent or =
employee of the=20
employer for . . . a work related injury sustained by the employee =
on the=20
job." Tex. Lab. Code Ann. =A7 408.001(a) (Vernon Supp. 2007). When =
an=20
employee sues a carrier for its misconduct in processing his =
injury claim,=20
the policy behind the exclusivity provision of the Act that =
protects the=20
employer from common law claims related to workplace injuries =
simply does=20
not apply Liability=20
as a result of a carrier's breach of the duty of good faith and =
fair=20
dealing or intentional misconduct in the processing of a =
compensation=20
claim is distinct from the liability for the injury arising in the =
course=20
of employment. Injury from the carrier's conduct arises out of the =
contractual relationship between the carrier and the employee and =
is=20
sustained after the job-related injury. To the=20
extent that Hulshouser suggests that an employee may not =
recover=20
for the additional physical pain and suffering, impairment, or =
mental=20
anguish caused by a workers' compensation carrier's misconduct in=20
processing his claim, it ignores the plain language of Aranda. =
As=20
stated by the Texas Supreme Court, an injured employee may in fact =
"incur=20
substantial damages" as a result of an insurer's breach of its =
duties and=20
such injuries, arising out of the relationship between the carrier =
and the=20
employee, are "sustained after the job related injury." =
Id. at=20
212-14. Nothing in the TWCA or Aranda prohibits an =
employee from=20
recovering damages for the additional aggravated injuries caused =
by a=20
workers' compensation carrier's misconduct in handling his claim. =
Other=20
than Hulshouser, TMI has not cited any authority that =
would so=20
severely limit the scope of damages available to an employee =
against a=20
workers' compensation carrier for its misconduct in processing a =
claim.=20
Thus, we decline to follow Hulshouser. Here, in regard to =
the=20
jury's awards for past and future physical pain and suffering and =
past=20
physical impairment, Ruttiger asserts that "he sought to recover =
for the=20
extreme physical pain and impairment that he suffered for eight =
months as=20
a result of his inability to secure pain medication after TMI =
refused to=20
pay for his surgery." In support of these claims, Ruttiger cites =
testimony=20
from his sister, Diana Espinosa, in which she stated that Ruttiger =
"got a=20
prescription once for his pain" but then "it was gone" and there =
"was no=20
more for eight months." Espinosa stated that, as a result of =
Ruttiger's=20
failure to get medications, "it was horrible" and Ruttiger =
"couldn't get=20
up out of a chair without making a horrible noise." Espinosa =
further=20
stated that as a result of his pain and physical limitations, =
Ruttiger had=20
difficulty caring for his children and performing his =
head-of-household=20
duties, he "couldn't do anything outside of his apartment," and he =
was=20
"stuck" there. Ruttiger also testified that his extended suffering =
of=20
physical pain was "very strenuous," it was difficult going down =
stairs and=20
leaving his apartment, and he "stayed in the house almost all of =
the=20
time." We hold that the trial court did not err in awarding =
Ruttiger=20
damages for his physical pain and suffering and physical =
impairment=20
because Ruttiger presented sufficient evidence that TMI's breach =
of its=20
duty of good faith and fair dealing caused him to suffer these =
independent=20
injuries "separate from [his] compensation claim." In support=20
of the jury's mental anguish award, Ruttiger cites Espinosa's =
testimony=20
that Ruttiger "got real depressed" because he was stuck inside his =
apartment. She explained, I =
saw dark=20
circles under his eyes and I saw him laying [sic] on the couch not =
looking=20
at us anymore with his head down. I saw worry. He's gotten =
lines--I=20
promise you he's gotten lines on his forehead in this two-year =
time. It's=20
been since all of this has gone on. And since it took eight months =
for him=20
to finally get help, he has completely lost every single thing =
that he=20
had. He lost his vehicle, he lost his apartment, he lost his =
furniture.=20
He's lost everything and everything that he was worth to himself =
was=20
gone. Ruttiger=20
had "sort of" given up, and "it started getting real bad" when he =
did not=20
have money "to wash [his children's] clothes" and "started selling =
his=20
furniture and he just kept trying and waiting and waiting and =
waiting for=20
that phone call and he never got it." Espinosa noted that =
ultimately=20
Ruttiger's credit was "shot," his phone was turned off, and he was =
evicted=20
from his apartment because he could not pay his rent. She stated =
that this=20
was particularly hard on Ruttiger because he was a father and was =
used to=20
being self-sufficient. Ruttiger was "dwindling away," felt =
"belittled,"=20
and was "emotionally drained." The ordeal had been "horrifying" =
for=20
Ruttiger and his family. Ruttiger=20
himself also testified that he was "angry" because he had been =
accused of=20
fraud, he was forced to stay in his house, his physical condition =
impacted=20
his relationship with his daughter, and he was humiliated because =
he had=20
to borrow money from his father. Ruttiger=20
presented the jury with evidence demonstrating that he suffered a =
high=20
degree of mental pain and distress that substantially disrupted =
his daily=20
life--independent from the disruptions caused by his compensable =
hernia=20
injury. See Bunton v. Bentley, 153 S.W.3d 50, 53 (Tex. =
2004)=20
(affirming $150,000 mental anguish award based on evidence that=20
plaintiff's ordeal had deprived him of sleep, caused him =
embarrassment in=20
community, disrupted his family, distressed his children, caused =
him=20
depression, and impugned his honor and integrity and that =
"plaintiff would=20
never be the same"); see also Service Lloyds Ins. Co. v.=20
Greenhalgh, 771 S.W.2d 688, 691-92 (Tex. App.--Austin 1989),=20
rev'd on other grounds, 787 S.W.2d 938 (Tex. 1990) =
(affirming=20
$8,000 mental anguish award against insurer for bad faith based on =
evidence that employee suffered extreme embarrassment, was forced =
to=20
borrow money to pay for medical care, was fired after investigator =
made=20
threats to his current employer, lost sleep, felt like a failure, =
and had=20
low self-esteem). Accordingly, we hold that the evidence is =
legally=20
sufficient to support the jury's award of $100,000 for mental =
anguish=20
damages. We overrule=20
TMI's fourth and fifth issues. In its=20
sixth issue, TMI contends that the evidence is legally =
insufficient to=20
support the jury's award of $11,500 for past damage to credit =
reputation=20
and $5,000 for future damage to credit reputation because he =
presented no=20
evidence that he applied for credit and was turned down or charged =
a=20
higher interest rate. "To recover=20
actual damages for loss of credit reputation, a plaintiff must =
show that a=20
loan was actually denied or a higher interest rate was charged and =
"[t]here must be a showing of injury, as well as proof of the =
amount of=20
that injury." EMC Mortg. Corp. v. Jones, No. =
05-06-00419-CV, 2007=20
WL 2447122, at *11 (Tex. App.--Dallas Aug. 30, 2007, no pet.) =
(citing=20
St. Paul Surplus Lines Ins. Co., v. Dal-Worth Tank Co., =
974=20
S.W.2d 51, 53 (Tex. 1998) and Provident Am. Ins. Co. v.=20
Castaneda, 988 S.W.2d 189, 199 (Tex. 1998)). The amount of =
damages=20
for the loss of credit reputation must only be established with =
the degree=20
of certainty to which it is susceptible. EMC Mortg. =
Corp., 2007=20
WL 2447122, at *11 (citing Sw. Bell Tel. Co. v. Sims, 615 =
S.W.2d=20
858, 864 (Tex. Civ. App.--Houston [1st Dist.] 1981, no writ)). =
Ruttiger=20
contends that he presented the "best possible evidence" by =
introducing=20
into evidence a copy of his credit report showing a negative =
credit rating=20
and his financial records showing his "calamitous decline in [his] =
earnings after his injury." Ruttiger also cites Espinosa's =
testimony that=20
Ruttiger's "credit [was] shot" and that Ruttiger got kicked out of =
his=20
apartment because he "couldn't pay for it anymore." However, =
Ruttiger did=20
not present any evidence that he was actually denied credit or =
charged a=20
higher interest rate, i.e., that he actually sustained damages as =
a result=20
of a loss of credit reputation. Accordingly, we hold that the =
evidence is=20
legally insufficient to support the jury's awards to Ruttiger for =
his=20
damage to his credit reputation. We sustain=20
TMI's sixth issue. We modify=20
the judgment to delete that portion of the judgment awarding =
Ruttiger=20
damages for his loss of credit reputation. We affirm the judgment =
of the=20
trial court as modified.
Terry=20
Jennings Panel=20
consists of Justices Nuchia, Jennings, and Keyes. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25.