Waiver of the Right to Dispute the Extent of a Compensable Injury; Clear as Mud?

Saturday, July 15, 2006 | 0

By Robert R. (Bob) Graves, Jr.
Burns Anderson Jury & Brenner, L.L.P.
Recently, the issue of whether a carrier may waive the right to dispute the extent of a claimant's compensable injury has become popular. Waiver issues associated with compensability disputes are governed by Texas Labor Code section 409.021, which provides, in part, that if a carrier does not contest the compensability of an injury on or before the 60th day after receiving the notice of the injury, the carrier waives the right to contest compensability. In conjunction with section 409.021, the former Texas Workers' Compensation Commission (TWCC) adopted TWCC Rule 124.3 Valid rules promulgated by an administrative agency acting within its statutory authority have the force and effect of legislation. See e.g. General Elec. Credit Corp. v. Smail, 584 S.W.2d 690 (Tex. 1979); Lewis v. Jacksonville Bldg. and Loan Ass'n, 540 S.W.2d 307 (Tex. 1976); Bower v. Edwards County Appraisal Dist., 752 S.W.2d 629 (Tex. App. - San Antonio 1988, writ denied); City of Lubbock v. Public Util. Comm'n of Texas, 705 S.W.2d 329 (Tex. App. - Austin 1986, writ ref'd n.r.e.). Rule 124.3(c) explains that Section 409.021 and subsection (a) of the rule (concerning carrier's duty to investigate and dispute a claim) do not apply to disputes of extent of injury. In the preamble to TWCC Rule 124.3, the TWCC explained:

Texas Labor Code, Section 409.021, is intended to apply to the compensability of the injury itself or the carrier's liability for the claim as a whole, not individual aspects of the claim. When a carrier disputes the extent of an injury, it is not denying the compensability of the claim as a whole, it is disputing an aspect of the claim. This is similar to when a carrier accepts a claim but disputes the existence of disability. A dispute of disability is a dispute of the amount of benefits that a person is entitled to. In much the same way, a dispute involving extent of injury is a dispute over the amount or type of benefits, specifically, medical benefits, to which the employee is entitled (i.e. what body areas/systems, injuries, conditions, or symptoms for which the employee is entitled to treatment); it is not a denial of the employee's entitlement to benefits in general.

Though the rule gives a carrier a time frame to file the dispute of extent of injury, failure to do so timely is a compliance issue. It does not create liability. Because a carrier has 45 days to either pay or deny a medical bill and because in a situation where the carrier does not accept a new body part/system as part of the compensable injury, the carrier is likely to deny the medical bill for treatment for that body part, the time frame for filing the dispute of extent of injury is tied to the carrier's deadline for paying or denying the medical bill.

25 Tex. Reg. 2096, 2102 (March 10, 2000). Accordingly, it would appear that the time frames established in Section 409.021 do not apply to extent of injury disputes. However, in TWCC Appeal No. 041738-s, the Appeals Panel established that when a carrier does not timely dispute the compensability of a claim, the compensable injury is defined by the information that could have been reasonably discovered by the carrier's investigation before the expiration of section 409.021's 60-day waiver period. If a carrier fails to deny the compensability of a condition that could have been reasonably discovered within the first 60 days of the claim, the carrier waives the right to challenge the compensability of the claimed condition. See also e.g. TWCC & DWC Appeal Nos. 052499, 052808, & 060186.

One court has addressed the application of Section 409.021 to extent of injury disputes. In TIG Premiere Ins. Co. v. Pemberton, 127 S.W.3d 270 (Tex. App. - Waco 2003, pet. denied), a claimant contended that under section 409.021(c), the carrier waived the right to dispute the extent of the claimant's injury because the extent of injury dispute was not raised within 60 days. The Court held that section 409.021 pertains only to a carrier's initial response to a notice of injury and does not preclude a carrier from later contesting a specific part of the injury or the extent of the injury. Id. at 274. The Appeals Panel addressed Pemberton in Appeal No. 040918, explaining that:

The issue in Pemberton was a clear extent-of-injury case, that is to say, the complained-of condition, deep vein thrombosis (DVT), developed some time after the original injury, and the issue was whether the DVT was causally related to the original compensable injury, and whether the carrier waived the right to dispute the compensability of the DVT. Under the circumstances of the Pemberton case, the Court of Appeals held that the waiver provision of Section 409.021(c) applied only to the carrier's initial response to a notice that an employee has been injured. In the instant case, we find that the claimant's neck injury was part of the "overall injury," and that the waiver provision of Section 409.021 applies. Pemberton, Supra. The hearing officer's decision that the * * *, compensable injury does not extend to include an injury to the neck, and that the carrier did not waive the right to contest compensability of the claimed neck injury by not timely contesting the injury in accordance with Sub-Section 409.021 and 409.022 is reversed and a new decision is rendered that the claimant's * * *, compensable injury includes an injury to the neck as a matter of law because the carrier waived the right to contest compensability of the claimed neck injury by not timely contesting the injury in accordance with Sub-Section 409.021 and 409.022.

See also e.g. TWCC Appeal Nos. 041822, 043110, 050833. However, in at least one circumstance, the Appeals Panel found that a carrier may not waive the right to dispute the extent of a condition known within the first 60 days, if there is no evidence showing or contending that the condition is compensable. In Appeal No. 043110, a claimant appealed the hearing officer's decision that the carrier did not waive the right to dispute the extent of the claimant's injury. At first, the claimant had been diagnosed with an acute lumbar strain. An MRI revealed bulging discs at L3-4 and L4-5, and a doctor's report diagnosed the claimant with lumbar facet traumatic arthritis. Evidence was presented indicating that the claimant also had pre-existing degenerative lumbar conditions. The Appeals Panel affirmed the hearing officer's determination that the claimant's lumbar sprain injury did not extend to or include the degenerative lumbar conditions, as they pre-existed the compensable injury and were ordinary diseases of life. The Appeals Panel further agreed that the carrier did not waive the right to dispute the claimant's extent of injury. The Appeals Panel noted that the Employer's First Report of Injury ("TWCC-1") identified the injury and body part as a low-back lumbar and lumbosacral strain and noted that none of the medical records or other documents during the investigation period "showed any pre-existing conditions were aggravated or that her injury had included [the claimed conditions]." Accordingly, The Appeals Panel affirmed the hearing officer's finding the carrier did not waive the right to dispute the degenerative lumbar conditions.

While the law concerning waiver of the right to dispute the extent of injury continues to develop, based on the Appeals Panel's interpretation of section 409.021, carriers and employers should carefully investigate and review injuries and carriers should dispute any conditions that are not related to the compensable injury before the 60th day after the carrier received notice of the injury.

Note: Robert "Bob" Graves, is a member of the Austin-based law firm of Burns Anderson Jury & Brenner, LLP (BAJB) and has practiced insurance defense law focusing on workers' compensation since 1995. He has extensive experience in all aspects of Texas Workers' Compensation, including medical disputes, compliance and practice matters, benefit disputes and subrogation.

Before joining BAJB, he was in-house counsel for Texas' largest workers' compensation insurance company. He represented the company in administrative and court proceedings and eventually managed an 11-person subrogation department. He returned to private practice at BAJB, where he engages in the complex interplay between legislative, governmental and regulatory forces.

Bob's leadership and legal experience made him a perfect fit when he joined BAJB in November 2000. From his early days as a Pathfinder with the 82PndP Airborne Division, to Willamette University College of Law's Law Review, to representing the largest workers' compensation carrier in Texas, he has consistently proven that hard work can accomplish great feats.

Burns Anderson Jury & Brenner L.L.P. is an Austin-based law firm that has a diverse practice, representing clients from the conference room to the courthouse. Experienced in mediation, administrative hearings, appellate work and litigation, BAJB attorneys and staff serve clients from business formation and deal making to dispute resolution. A full range of individuals, professionals, businesses and entrepreneurs, including insurance carriers, railroads and manufacturers, count on BAJB for guidance toward superior results throughout the continued life of their business.

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