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The
court on this day,

May
17, 2007, has withdrawn this opinion and judgment dated April 19,
2007, and substituted the opinion and judgment dated May 17,
2007.

Opinion filed April 19, 2007

In The

Eleventh Court
of Appeals

__________

No. 11-06-00086-CV

__________

ROSAURA O. LOPEZ,
Appellant

V.

ZENITH INSURANCE COMPANY, Appellee

On Appeal from the County Court at Law

Midland County,
Texas

Trial Court Cause No. CC-12083

O P I N I O N

This
is a workers=
compensation case.  Zenith
Insurance Company filed suit to appeal the Texas Workers=
Compensation Commission=s
Appeals Panel=s[1]
decision that it had waived the right to dispute Rosaura O. Lopez=s
workers=
compensation claim.  The trial
court granted Zenith=s
motion for summary judgment finding that Zenith had timely controverted
Lopez=s
claim and that, because Lopez had not suffered an injury in the course and
scope of her employment, Zenith could not waive its right to contest her
claim.  We reverse and
remand.

I.  Background
Facts

Lopez
was employed at Best Inn & Suites in Midland as a housekeeper.  Zenith was Best Inn=s
workers=
compensation carrier.  Lopez
claimed that she injured herself while in the course and scope of her
employment on March 21, 2003.
Stephanie Carby, an adjustor for Zenith, interviewed Lopez on June
18 and June 23, 2003.  The
second interview was recorded and was conducted with the benefit of an
interpreter.  During this
interview, Lopez told Carby that she had also hurt herself sometime in
April.  Carby estimated that
the second injury occurred on April 1.

On
August 28, 2003, the TWCC conducted a benefit review conference.  During that conference, Lopez
contended that the April incident occurred on April 4.  The parties were unable to reach
an agreement during the conference; and on September 4, Zenith filed a
notice of controversion.
Zenith=s
notice was dated June 25, 2003, and identified the date of injury as April
1, 2003.

The
TWCC conducted a contested case hearing in November.  The hearing officer identified the
following disputed issues with respect to the April injury:

1.  Did Claimant sustain a compensable
injury in the course and scope of employment on April 4, 2003?

2.  Is Carrier relieved from liability
under Texas Labor Code Ann. Sec. 409.002 because of Claimant=s
failure to timely notify Employer pursuant to Sec. 409.001?

3.  Does Claimant have disability as a
result of her injury of April 4, 2003?

4.  Has Carrier waived the right to
contest the compensability of the claimed injury by not timely contesting
the injury in accordance with Texas Labor Code Ann. Sec. 409.021 and Sec.
409.222?

Following
the hearing, the hearing officer issued a decision and order that included
findings of fact and conclusions of law.  The hearing officer found that
Lopez did not injure herself or suffer damage or harm to the physical
structure of her body during the course and scope of her employment and
that Lopez did not timely report an April injury to her employer.  The hearing officer found that
Zenith received written notice of the April 1 claim on June 18 and
received written notice of the April 4 claim on September 13 when Lopez
responded to Zenith=s
interrogatories.  The hearing
officer also found that Zenith did not begin paying benefits or controvert
the April 1 or April 4 claims within seven days of receiving written
notice.  The hearing officer
concluded, however, that Zenith had not waived its right to contest
Lopez=s
claim because she did not suffer a compensable injury and, therefore, that
Zenith was not liable for benefits.

Lopez,
but not Zenith, appealed this decision to the TWCC Appeals Panel.  The panel utilized the April 4
injury date and found that, because Zenith did not begin paying benefits
or controvert Lopez=s
claim within seven days of receiving her interrogatory answers, it had
waived the right to contest the compensability of that injury.  Zenith appealed the panel=s
decision to state court and filed a traditional motion for summary
judgment arguing that the panel=s
decision was erroneous as a matter of law.  The trial court granted
Zenith=s
motion and entered a final judgment reversing the panel=s
decision.

II.  Issues

Lopez
challenges the trial court=s
summary judgment with two issues.
First, Lopez argues that the trial court erred because Zenith
failed to contest her claim within seven days after it received written
notice of her injury.  Second,
Lopez argues that the trial court erred because the hearing officer=s
finding of no injury in the course and scope of her employment does not
support an exception to the provisions of Tex. Lab. Code Ann. ''
409.021, 409.022 (Vernon 2006).

III. Analysis

A.
Did Zenith Timely
Contest Lopez=s
Claim?

For
injuries occurring prior to September 1, 2003, Section 409.021 required
carriers to initiate benefits or notify the TWCC and the employee in
writing of its refusal to pay benefits within seven days of receiving
written notice of an injury.[2]  Lopez argues that her statement to
Carby during the June 23 interview that she injured herself at work in
April constituted a written notice of injury and that, because Zenith did
not file a notice of controversion within seven days of this interview, it
did not comply with Section 409.021.
Zenith answers that Lopez=s
oral statement cannot constitute a written notice, contends that it did
not receive written notice until Lopez=s
recorded statement was transcribed on September 5, and argues that the
date of notice has previously been determined because Lopez did not
controvert Carby=s
affidavit.

B.  Did the Trial Court Have
Jurisdiction to Consider Zenith=s
Controversion?

We
need not resolve whether oral notice can constitute a written notice of
injury or if Zenith timely controverted Lopez=s
claim because the trial court lacked jurisdiction to consider this
issue.  Subject matter
jurisdiction may be raised for the first time on appeal by the parties or
by the court. Univ. of Tex. Sw. Med.
Ctr. at Dallas v. Loutzenhiser, 140
S.W.3d 351, 358 (Tex. 2004).  In fact, courts are Aobliged
to ascertain that subject matter jurisdiction exists regardless of whether
the parties have questioned it.@  Id.

The
hearing officer=s
findings of fact are binding if not appealed.  Tex. Lab. Code Ann. '
410.302 (Vernon 2006); see also TIG Premier Ins. Co. v. Pemberton,
127 S.W.3d 270, 276 (Tex. App.CWaco
2003, pet. denied) (claimant could not complain about the hearing
officer=s
finding of no causal relationship between his fall and the subsequent
diagnosed medical condition because he did not raise that issue with the
appeals panel).  The hearing
officer specifically found that Zenith did not file a notice of
controversion within seven days of receiving written notice of
injury.  The appeals
panel=s
decision indicates that only Lopez appealed the hearing officer=s
findings.

We
realize that Zenith received a favorable result from the hearing
officer.  This does not alter
the analysis.  The trial court
lacks jurisdiction to consider new issues because, in that instance, the
moving party has failed to exhaust its administrative remedies.  See id. The TWCC allowed a
party to make a conditional request for review by the appeals panel if the
overall contested-case- hearing decision was favorable.  See 28 Tex. Admin. Code '
143.3(c) (West 2007).  Zenith,
therefore, had the opportunity to appeal the hearing officer=s
finding but did not do so and, consequently, did not exhaust its
administrative remedies.
See Krueger v. Atascosa
County, 155 S.W.3d 614,
618-20 (Tex. App.CSan
Antonio 2004, no pet.) (pro se claimant who received a favorable result at
the contested case hearing and did not file an appeal with the appeals
panel could not raise issues in judicial review suit that were not
presented to the appeals panel).

Furthermore,
Section 410.302 limits the issues that the trial court can consider when
an appeals panel decision is appealed.  Tex. Lab. Code Ann. ' 410.302 (Vernon 2006).  The statute requires that the
appealing party Aspecifically
set forth the determinations of the appeals panel by which [it is]
aggrieved.@
Id.  The appeals panel noted in its
decision that the hearing officer found that Zenith first received written
notice on September 13 and then wrote A[t]he
carrier does not assert that it submitted a >Cert-21,=
within the required period.@  Zenith=s
petition does not complain of this determination.[3]

Because
Zenith did not appeal the hearing officer=s
and appeal panel=s
determinations that it did not timely file a notice of controversion, the
trial court lacked jurisdiction to consider this issue.  Lopez=s
first issue is moot.

C.
Did Zenith Waive the Right to Contest Lopez=s
Injury?

The
hearing officer found that Lopez Adid
not injure herself or suffer damage or harm to the physical structure of
her body during the course and scope of her employment on April 4, 2003
while vacuuming for Employer.@  Lopez did not appeal this
determination, and she acknowledges that it has now become final.  She contends, however, that this
is of no consequence because Zenith failed to timely controvert her
injury.  Zenith answers that
it was not required to file a notice of controversion because Lopez
suffered no injury.

The
trial court agreed with Zenith and cited Continental Casualty Company
v. Williamson, 971 S.W.2d 108 (Tex. App.CTyler
1998, no pet.), for the proposition that Zenith did not waive its right to
contest Lopez=s
claim because she suffered no injury in the course and scope of her
employment.  The appeals panel
agreed with Lopez.  It held
that Williamson applied when there was a finding of no injury but
not when there was a finding of no compensable injury.  Because the medical records
established that Lopez has cervical/brachial syndrome, a shoulder
sprain/strain, an elbow injury, and a wrist sprain/strain and because
Zenith did not appeal the hearing officer=s
finding that Lopez had been unable to obtain and retain employment due, in
part, to the April 4 injury, the panel found that she did have an injury
B
if not a compensable injury B
and that Zenith had waived the right to contest the compensability of that
injury.

We
agree with the appeals panel.
When the legislature adopted Chapter 409 of the Labor Code,[4]
it established several deadlines for employees, employers, and carriers
and imposed consequences for failing to meet these deadlines.  The legislature intended to create
a streamlined process for administering compensation claims to avoid
delays that caused financial hardship for claimants and a consequent need
for early attorney involvement.
Cont=l
Cas. Co. v. Downs, 81 S.W.3d 803, 806 (Tex. 2002).  An efficient system also benefits
employers and carriers by reducing costs.  The legislative deadlines and
their application are an important part of this streamlined process.

For
pre-September 1, 2003 injuries, Section 409.021(a) required carriers
either to begin paying benefits or to give notice of their refusal to pay
benefits within seven days of the receipt of written notice of
injury.  For all injuries if
the carrier chooses to dispute a claim, it must state the basis for that
refusal and ordinarily is limited to that basis in subsequent
proceedings.  See
Section 409.022(b).  If,
however, it begins paying benefits, the carrier has sixty days from the
date it was notified of the injury to conduct an investigation and may
deny compensability for any valid reason.  Section 409.021(c).  For pre-September 1, 2003
injuries, if the carrier neither began paying benefits nor controverted a
claim within seven days, it lost the right to take advantage of the
sixty-day investigative period and was required to pay benefits.  Downs, 81 S.W.3d at
807.  For post-September 1,
2003 injuries, missing this deadline constitutes an administrative
violation that subjects the carrier to a mandatory fine.  See Section
409.021(a)(2)(B)(a-1).

In
Williamson, 971 S.W.2d at 108, the carrier missed both the
seven-day and sixty-day deadlines.
The claimant fell down a staircase at work and was taken to the
doctor by his employer=s
safety director.  The doctor
found no injury and released the claimant to return to work.  The safety director wrote the
company=s
workers=
compensation carrier a letter and relayed the events to them including the
doctor=s
finding of no injury. The carrier did not contest the compensability of
the injury for more than sixty days after it first received notice.  The hearing officer determined
that the fall was staged and that the claimant was not injured.  The hearing officer also held that
the carrier had waived its right to contest the claim. However, because
there was no injury, the hearing officer determined that the claimant was
not entitled to any benefits.
The Tyler Court agreed with the hearing officer.  It noted the difference between an
injury and a compensable injury and held that the failure to timely
controvert a claim cannot create a compensable injury where no injury
otherwise exists.  Id.
at 110-11.

The
Fort Worth Court has twice held that this rule does not apply when there
is an injury and the dispute is over the compensability of that injury.
Alexander v. Lockheed
Martin Corp., 188 S.W.3d 348 (Tex. App.CFort
Worth 2006, pet. denied); Zurich Am. Ins. Co. v. Gill, 173 S.W.3d
878 (Tex. App.CFort
Worth 2005, pet. denied).  The
court held that this distinction was necessary, at least in part, to
effectuate the legislative intent behind Section 409.021.  The statute requires a prompt
initial decision and creates an incentive for carriers to initially pay
benefits if there is any question about the compensability of a claim
B
but it also provides a quick administrative process to resolve any
disputed issues.  However, the
opportunity to participate in this process is conditioned upon compliance
with the statute=s
deadlines.  See Downs,
81 S.W.3d at 807 (when carrier fails to comply with seven-day deadline to
pay or dispute, it may not avail itself of sixty-day period to investigate
or deny compensability).

If
a carrier loses the right to contest the compensability of a claim, it may
sometimes be required to pay a claim that it could have successfully
challenged.  This will
financially impact the carrier and, from its perspective, will appear as a
windfall to the claimant.  But
because any benefits are calculated based upon an actual injury, if the
claimant were not entitled to workers=
compensation benefits, presumably they would be entitled to other forms of
private or public disability benefits or medical coverage.  However, if the carrier is
required to pay benefits to an uninjured individual, by definition a
windfall results because the claimant is receiving benefits that could not
be owed by anyone for a condition that does not exist.

Zenith
argues that the Fort Worth Court and the appeals panel have reached the
wrong result because they both misinterpret the definition of Ainjury@
in workers=
compensation cases.  Zenith
argues that claimants must establish that their injury is the result of an
accident rather than a pre-existing condition and that, if they cannot do
so, the carrier is under no obligation to controvert their claim.  We agree with Zenith that
pre-existing conditions are normally not compensable and that the effect
of a waiver holding is to require a carrier to pay benefits for an injury
that may be a non-compensable, pre-existing condition.  We do not agree, however, with
Zenith=s
conclusion that the Fort Worth Court and TWCC Appeals Panel have
misinterpreted the definition of injury.  We believe both have properly
recognized the distinction between an injury and a compensable injury and
believe further that their analysis is consistent with the
Williamson decision.

In
Alexander, 188 S.W.3d at 348, the claimant had a pre-existing
condition which required the use of a cane and for which she had
previously received group health benefits.  In Gill, 173 S.W.3d at 878,
the claimant suffered from allergic rhinitis and maxillary sinusitis.  In both cases, the claimant=s
physical condition was not disputed; but in each the hearing officer found
that the injury was not sustained in the course and scope of their
employment.  In
Williamson, 971 S.W.2d at 109, the hearing officer found that AClaimant
did not sustain damage or harm to the physical structure of his body in
the course of an incident on the staircase at the premises of his
employer.@

Zenith
correctly notes that the Williamson finding is similar to one made
by the hearing officer in this case.[5]  Zenith concludes that this finding
equates to a finding of no injury and, therefore, that Williamson
is applicable and that it
could not waive its right to contest Lopez=s
claim.  The verbiage of the
two findings is similar, but so too was the finding in Alexander,
188 S.W.3d at 350.[6]  Our analysis requires that we
consider these findings B
not in isolation, but in light of the entire record.  The distinguishing factor is that
in Williamson the medical doctor reported that the claimant did not
suffer any injury.  In
Alexander, Gill, and our case, the medical records indicated that
the claimant had an injury.
In fact, the doctor who evaluated Lopez at the TWCC=s
request found that she had a 5% whole person impairment.

The
dispute was whether that injury was compensable.  During closing argument at the
contested case hearing, Zenith=s
counsel summarized its position by saying:

Your
Honor, with respect to the injury that occurred in April or alleged to
have occurred in April, one, I think the evidence clearly established if
she did sustain any kind of compensable injury on that date, she didn=t
report it timely to her employer.
That=s
clear from the testimony.  And
she had no disability that would have resulted from an injury, had there
been a compensable injury.  As
it was, there was no compensable injury.

On
appeal, Zenith argues that Lopez=s
medical records do not establish an injury because they do not show damage
or harm to the physical structure of the body that is traceable to a
definite time, place, and cause.
Thus, by necessity, any injury is a pre-existing condition.  Zenith cites no summary judgment
evidence characterizing Lopez=s
injury as a pre-existing condition, but even if we assume that her injury
was, that alone is not dispositive because the aggravation of a
pre-existing condition is compensable.  Peterson v. Cont=l
Cas. Co., 997 S.W.2d 893, 895 (Tex. App.CHouston
[1st Dist.] 1999, no pet.).

Zenith=s
argument is based upon the premise that the claimant has the burden of
proof to establish a compensable injury and that substantive satisfaction
of this burden B
as opposed to procedural or avoidance issues[7]
B
can be challenged on appeal regardless of whether the carrier complies
with Section 409.021.
Zenith=s
position would render the statute=s
deadlines largely meaningless because it would exempt most, if not all,
medical issues from the scope of the legislature=s
waiver provision. Clearly, the legislature intended that the carrier=s
initial decision be made promptly and that in any instance their
investigation be completed shortly thereafter.  By imposing strict deadlines and a
waiver provision, the legislature adopted a scheme whereby in some
instances the carrier can be forced to pay benefits even though the
claimant did not completely discharge its burden of proof at the contested
case hearing.  The
statute=s
language does not support a construction that exempts medical issues from
this process.

We
also note that the Texas Supreme Court has twice now had the opportunity
to review the Fort Worth Court=s
construction of the statute but has not done so.  We believe that the Fort Worth
Court=s
analysis of the statute is correct and is not inconsistent with the
Williamson holding.
The trial court erred when it held that as a matter of law the
hearing officer=s
finding of no injury in the course and scope of employment prohibited the
application of the waiver doctrine.
Lopez=s
second issue is sustained.

IV. Holding

The
judgment of the trial court is reversed, and this case is remanded to the
trial court for further proceedings.

RICK
STRANGE

JUSTICE

April
19, 2007

Panel consists
of: Wright, C.J.,

McCall, J., and
Strange, J.

[1]The legislature abolished the Texas
Workers= Compensation Commission on September 1, 2005, and
transferred its responsibilities to the Texas Department of Insurance,
Division of Workers= Compensation.  Act of May 29, 2005, 79th Leg.
R.S., ch. 265 '' 8.001(b), 8.004(a), 2005 Tex. Sess. Law Serv.
608.  Because the TWCC was
still in existence at all times relevant to this dispute, we will refer to
it rather than the Division.

[2]The statute now provides carriers with fifteen days
to make this initial decision.

[3]Zenith=s petition indicates that it was appealing the
reversal of the hearing officer=s decision and was seeking to affirm the following
findings and conclusions of the hearing officer:

$
Claimant did not injure herself or suffer damage or harm to the
physical structure of her body during the course and scope of employment
on April 4, 2003 while vacuuming for Employer.

$
Claimant did not report the claimed injury of April 4, 2003 to
Employer within 30 days of April 4, 2003.

$
Claimant did not sustain a compensable injury in the course and
scope of employment on April 4, 2003.

$
Because Claimant did not sustain a compensable injury, she did not
have disability.

$
Carrier is relieved from liability under Texas Labor Code Ann. Sec.
409.002 because of Claimant=s failure to timely notify Employer pursuant to
Sec. 409.001.

$  Even
though Carrier did not timely contest the claimed injury, Carrier did not
waive its right to contest compensability because Claimant did not sustain
a compensable injury.

[4]Tex. Lab. Code Ann.
ch. 409 (Vernon
2006).

[5]The hearing officer found that AClaimant did not injure herself or suffer damage or
harm to the physical structure of her body during the course and scope of
employment on April 4, 2003 while vacuuming for Employer.@

[6]The hearing officer=s decision stated that A[a]lthough [Appellant] did not sustain an injury in
the course and scope of employment on October 17, 2002, her injury is
compensable because [Appellee] waived the right to contest
compsensability.@

[7]For example, timely reporting an injury or
intentional
injuries.