Rоsa RODRIGUEZ, Petitioner, v. SERVICE LLOYDS INSURANCE COMPANY, Respondent.
No. 98-0006.
Supreme Court of Texas.
Decided July 1, 1999.
Rehearing Overruled Sept. 9, 1999.
Argued Nov. 17, 1998.
The court of appeals’ refusal to issue mandamus relief is in direct conflict with another court of appeals’ decision in In re Luby‘s Cafeterias, Inc.5 There an employee sued her employer for damages resulting from a co-worker‘s sexual assault. The court of appeals issued mandamus directing the district court to abate the action until the TWCC could rule whether plaintiff‘s injury was compensable and her suit thereby precluded. The court explained that “it would be pointless for the court and parties in the underlying suit to expend their resources on a trial until the Commission first decides the compensability issue.”6 The same thing is true in the present case.
I would grant the motion for rehearing and direct the district court to abate Serrano‘s action against TWCIF. Accordingly, I respectfully dissent.
Evelyn T. Ailts, Todd Lonergan, Dean G. Pappas, Houston, for Respondent.
Justice BAKER delivered the opinion of the Court, in which Justicе ENOCH, Justice OWEN, Justice ABBOTT, and Justice GONZALES joined.
In this workers’ compensation case we consider: (1) whether
I. FACTS
Rosa Rodriguez injured her back at work on July 20, 1993, and filed a workers’ compensation claim. Thrеe months later, her treating chiropractor certified that
Rodriguez asked for the Commission‘s permission to change treating doctors on January 31, 1994. The Commission approved her request. She then saw another chiropractor who recommended that she see a medical specialist, which she did. The orthopedic surgeon who next examined and tested Rodriguez‘s back, concluded that she needed surgery for “a severely ruptured disc with nerve root impingement.” Rodriguez sought a second opinion from another doctor who, after examining Rodriguez, concluded that surgery was not necessary. When Rodriguez continued to experience back pain, she returned to the orthopedic surgeon, who found that her symptoms had worsened and again recommended surgery.
Based on these opinions, Rodriguez then returned to the Commission to change her initial assigned impairment rating. At a contested case hearing held on October 31, 1994, the various doctors who had examined her presented their conflicting opinion testimony. The hearing officer found against Rodriguez. The officer concluded that Rodriguez had not disputed her impairment rating within ninety days of its assignment, and, therefore, it had become final under the 90-day Rule. See
Rodriguez next appealed to the district court. She alleged, among other things, that the appeals panel erred in affirming the hearing officer‘s conclusions about the impairment rating‘s finality because they were not supported by the evidence. She also alleged that the impairment rating was invalid because she had experienced a substantial change of condition. Rodriguez argued that the district court should review the Commission‘s findings under a de novo standard. Service Lloyds Insurance Company, her employer‘s insurance carrier, specially excepted, contending that Rodriguez‘s pleadings were defective. The distriсt court sustained the special exceptions and ordered Rodriguez to replead and seek only relief reviewable under the substantial evidence rule.
Rodriguez amended her petition by adding the substantial evidence standard as an alternative standard, but did not delete her other claims. Upon Lloyds’ motion, the district court struck Rodriguez‘s pleadings and dismissed her cause of action for not repleading according to its order and for not filing the Commission record for review. The court of appeals affirmed, agreeing that substаntial evidence was the appropriate standard for judicial review. 961 S.W.2d 318.
II. STANDARD OF REVIEW
In 1989, the Legislature completely revised the Texas workers’ compensation system. See Texas Workers’ Comp. Comm‘n v. Garcia, 893 S.W.2d 504, 510 (Tex. 1995). It restructured the administrative process as well as judicial review of Commission decisions under that process. See
If the dispute involves compensability or eligibility for or the amount of income or death benefits, a district court reviews the Commission appeals panel decision under a modified de novo standard. See
Rodriguez argues that the modified de novo standard applies here because her impairment rating challenge necessarily affects her entitlement to income benefits. Rodriguez further contends that the court of appeals erred in dismissing her claim because her pleadings adequately stated a claim under this standard. Lloyds responds that the substantial evidence rule aрplies because the issue of the impairment rating‘s finality under
An employee receives impairment income benefits according to the employee‘s impairment rating, which is the percentage of the whole body‘s permanent impairment. See
A doctor will not certify an impairment rating until the employee reaches “maximum medical improvement,” the point at which the employee‘s injury will not materially improve with additional rest or treatment. See
Until an employee reaches maximum medical improvement, he or she may receive temporary income benefits. See
Any dispute that challenges an impairment rating‘s finality necessarily implicates the date of maximum medical improvement and the amount paid as temporary income benefits. This dispute may also impact the employee‘s eligibility for, and the calculation of, impairment income benefits and supplemental income benefits. Disputes аbout an injured employee‘s impairment rating are, therefore, disputes about benefits. Because the modified de novo standard of review applies to these types of benefit disputes, that standard also applies to impairment rating disputes, including disputes that challenge an impairment rating‘s finality. Accordingly, the court of appeals erred in holding that substantial evidence review applies to this finality issue.
III. THE 90-DAY RULE
Rodriguez contends that we should reverse the court of appeals’ judgment because, under modified de novo rеview, she is entitled to plead exceptions to the 90-day Rule, including substantial change of condition, and because she disputed her impairment rating within ninety days. Lloyds responds that even under a modified de novo review, Rodriguez cannot plead an exception to avoid the 90-day Rule because the Rule itself does not provide for exceptions and the exceptions created by the Commission are invalid. We agree that the 90-day Rule does not include exceptions, but we conclude that Rodriguez is entitled to seek judiсial review of whether she disputed the impairment rating within ninety days.
We construe administrative rules, which have the same force as statutes, in the same manner as statutes. See Lewis v. Jacksonville Bldg. & Loan Ass‘n, 540 S.W.2d 307, 310 (Tex. 1976). Unless the rule is ambiguous, we follow the rule‘s clear language. See Republicbank Dallas, N.A. v. Interkal, Inc., 691 S.W.2d 605, 607 (Tex. 1985). In construing a Commission rule, our primary objective is to give effect to the Commission‘s intent. See Mitchell Energy Corp. v. Ashworth, 943 S.W.2d 436, 438 (Tex. 1997).
The plain language of the 90-day Rule does not contain exceptions. See
In interpreting this rule, however, the Commission appeals panels have created exceptions. One exception allows the Commission to recalculate an impairment rating after the ninety-day period has expired if the claimant shows a “substantial change of condition.” Other exceptions include “significant error” and “clear misdiagnosis.” While we defer to the Commission‘s interpretation of its own regulation, we cannot defer to an administrative interpretation that is “plainly erro
A presumption favors adopting rules of general applicability through the formal rulemaking procedures as opposed to administrative adjudication. See Amarillo Indep. Sch. Dist. v. Meno, 854 S.W.2d 950, 958 (Tex. App.—Austin 1993, writ denied). Allowing an agency to create broad amendments to its rules through administrative adjudication rather than through its rulemaking authority undercuts the Administrative Procedure Act (APA). See
In exceptional cases, an agency may сhoose to formulate and enforce a general requirement through a decision in a particular case. See Lone Star Gas, 844 S.W.2d at 689; Meno, 854 S.W.2d at 958. An agency may do this when using the rulemaking procedure would frustrate the effective accomplishment of the agency‘s functions. See Lone Star Gas, 844 S.W.2d at 689. Adjudicative rulemaking may be appropriate, for example, when the agency is construing a new rule or when a dispute deals with a problem that requires ad hoc resolution because the issue cannot be captured within the bounds of a general rule. See Meno, 854 S.W.2d at 958. The аgency‘s discretionary choice to rely on adjudication is subject to judicial review and revision. See Meno, 854 S.W.2d at 958.
Here, we see no reason to overturn the presumption favoring the fairness and public participation that accompany formal rulemaking under the APA. See Meno, 854 S.W.2d at 958. The 90-day Rule certainly is not new. See 16 Tex. Reg. 178 (Rule 130.5 adopted effective January 25, 1991). In addition, the Commission could have easily formulated exceptions in the language of a general rule. In fact, the Commission appeals panels formulated their exceptions in the language of a general rule, identifying the exceptions as “substantial change of condition,” “significant error,” and “clear misdiagnosis.”
The Legislature enacted the APA to avoid the very problem these broad ad hoc exceptions create. See Meno, 854 S.W.2d at 957-58. We are unable to ascertain whether all Commission appeals panels or contested case hearing officers recognize these exceptions or are obligated to apply them consistently in all cases. And reading the Commission‘s rulеs would not give an employee or insurance carrier notice of these exceptions to the 90-day Rule because the exceptions are not found in the printed rules. See
Rodriguez also argues that, even without the benefit of exceptions, her pleadings still adequately state a claim under the modified de novo standard. In her second amended petition, Rodriguez alleges that she had no actual knowledge of the initial impairment rating when it was assigned and that her objection to it was within the ninety days as the Rule rеquires. This challenge presents a viable issue for judicial review. See
IV. SUBSTANTIAL CHANGE OF CONDITION
Rodriguez‘s pleadings also allege that her original impairment rating was erroneous because after it was assigned there had been a substantial change in her medical condition. Rodriguez argues that she was entitled to an evidentiary hearing on her substantial change of conditiоn in the district court under section 410.307(a) of the Labor Code. See
Lloyds argues that Manasco is virtually identical to the present cause and should control our decision here. Lloyds argues that, like Manаsco, Rodriguez seeks to use section 410.307 to avoid the consequences of not exhausting her administrative remedies. We do not agree that Rodriguez failed to exhaust her administrative remedies as Manasco did. In Manasco, a hearing officer determined Manasco‘s impairment rating at a contested case hearing. Manasco did not pursue an administrative appeal, but appealed directly to the district court. See
Nevertheless, Rodriguez is not entitled to use section 410.307 to plead substantial change of condition. Again, section 410.307 is a rule of evidence that applies to modified de novo judicial review; it is not an independent cause of action. See Manasco, 971 S.W.2d at 64. In the district court, extent of impairment evidеnce is limited to evidence that was presented to the Commission, “[e]xcept as provided in Section 410.307.”
We conclude that Rodriguez is entitled to challenge only whether she disputed her impairment rating within ninety days. If the trial court finds that she disputed her
V. CONCLUSION.
In summary, we conclude that while Rodriguez may not plead an exception to Rule 130.5(e), she is entitled to judicial review about whether she disputed her impairment rating within ninety days. We further conclude that the finality of an impairment rating under Rule 130.5(e) is a mаtter concerning income benefits to the employee and is thus reviewable under the Texas Workers’ Compensation Act‘s modified de novo review. We reverse the court of appeals’ judgment and remand the cause to the trial court for further proceedings consistent with this opinion.
Chief Justice PHILLIPS filed a concurring opinion, in which Justice HECHT, Justice HANKINSON, and Justice O‘NEILL joined.
Chief Justice PHILLIPS, joined by Justice HECHT, Justice HANKINSON and Justice O‘NEILL concurring.
I concur in the Court‘s decision to remand, but I disagree with the scope of that remand. I do not agree with the Court that Rule 130.5(e) invariably forbids any challenge to the first assigned impairment rating after the 90-day period provided in the rule. Although the rule “considers” an impairment rating final absent a timely dispute, it does not define that type of finality or otherwise explain the consequences of an untimely dispute. Because the rule‘s meaning is unclear, I would adopt the Commission‘s administratively developed construction to permit challenges after 90 days in limited circumstances.
Rule 130.5(e) provides:
The first impairment rating assigned to an employee is considered final if the rating is nоt disputed within 90 days after the rating is assigned.
I disagree. We should not presume that “considered” is mere surplusage. The proper presumption is that every word in a statute or rule was deliberately chosen for a meaning and a purpose. Jessen Assocs., Inc. v. Bullock, 531 S.W.2d 593, 600 (Tex. 1975). As we said in Perkins v. State, 367 S.W.2d 140, 146 (Tex. 1963), “a cardinal rule of statutory construction is that each sentence, clause and word is to be given effect if reasonable and possible.”
Moreover, when interpreting an administrative rule, we must consider the rule‘s administrative construction. See
To assist us in this regard, the Commission has filed two amicus curiae briefs, explaining its applicatiоn of Rule 130.5(e). The Commission advises that “considered final” cannot be equated with “absolutely final.” Instead, the Commission applies the rule according to the facts in each case. In this case, the Commission submits that Rodriguez had the right to avoid finality under the rule if she could prove by a preponderance of the evidence that either:
This Court recognizes that “finality” under the rule may be attacked procedurally, but it rejects any notion that “finality” may also be challenged substantively. This conclusion, the Court says, is required by both the “clear” language of the rule and the Commission‘s original intent, which the Court divines from a Commission statement published in the Texas Register eight years ago.
Prior to adopting its rules, the Commission published a draft for public comment. See 15 Tex. Reg. 6464 (1990). One critic complained that the 90-day rule was “unnecessary and would preclude the revisiting of the issue [of an employee‘s impairment rating].” 16 Tex. Reg. 177 (1991). The Commission disagreed, and explained its view in the Texas Register. Here is the Commission‘s complete response:
The commission disagrees because allowing the impairment rating to be revisited would only allow a doctor to assign an inappropriate impairment rating to begin with, which should be discouraged. Additionally, after the 104-week MMI [maximum medical improvement] threshold has been reached, MMI cannot be revisited.
16 Tex. Reg. 177 (1991). What does this mean? Clearly, the Commission thought the 90-day rule was needed to encourage doctors to use care in assigning impairment ratings, but its view regarding the preclusive effect of its rule is not so apparent. If the rule was intended to preclude any reconsideration of the assigned impairment rating after 90 days, why did the Commission immediately reference the two year period permitted under the Labor Code for determining an employee‘s MMI, or maximum medical improvement? Because an injured employee‘s impairment rating cannot be determined until that employee reaches maximum medical improvement, see
Rather than this cryptic comment, I would rely on the Commission‘s established practice under the rule after years of practical experience. That practice, as explained in the Commission‘s amicus briefs, would permit a substantive challenge to the employee‘s impairment rating (and MMI)after the 90-day period under limited circumstances. Applying that construction to this case, I would remand to the trial court both Rodriguez’ procedural claim that her objection to the assigned impairment rating was timely, and her substantive claim that, notwithstanding any procedural error, her assigned impairment rating of four percent was the product of misdiagnosis or other significant medical error. Not only does this construction properly defer to the Commission‘s established construction of its own rule, it also is supported by the liberal construction we apply to “workers’ compensation legislation to carry out its evident purpose of compensating injured workers and their dependents.” Albertson‘s, Inc. v. Sinclair, 984 S.W.2d 958, 961 (Tex. 1999).