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Texas Court of Appeals Rules Against Injured Worker For Failure to Exhaust Administrative Remedies in Holmes v. Zurich Insurance Company

One of the most difficult aspects of coping with a workplace injury can be dealing with the your employer’s insurance company. Most employers are required to carry workers compensation insurance so that ideally, when a worker is injured, he or she can receive payments until able to resume work. However, sometimes insurers will refuse to pay for injuries or procedures that they believe do not fall within their “scope,” which was the case with Holmes v. Zurich Insurance Company.

In Holmes, the case involved a tire lube technician, Aaron Holmes, who injured his back at work. After he applied for workers compensation, the company’s insurance carrier, Zurich, accepted that Holmes had a lower back sprain, but not any other injuries. In February 2008, Holmes and Zurich participated in a benefit review conference to resolve the dispute, but were unsuccessful. A benefit contested case hearing was then held so that it could be determined whether Zurich had to compensate for a two-millimeter disc protrusion and two other injuries. In May 2008, the Division of Workers Compensation hearing officer found that the disc protrusion was a compensable injury, but not the others.

Holmes then sought pre-authorization for spinal surgery pursuant to the Texas Workers’ Compensation Act. After being denied once and having it overturned by the Independent Review Organization, Holmes had the procedure done. However, when Zurich received the bill, it refused to pay on the grounds that the surgery repaired non-compensable injuries in addition to the disc protrusion.

Holmes sued Zurich, claiming statutory and common law bad faith, fraud, and enforcement of a final order from the Division of Workers Compensation. Zurich filed a motion for summary judgment, claiming among other things that Holmes failed to exhaust his administrative remedies before filing a lawsuit. The trial court granted the motion, and Holmes appealed to the Court of Appeals for the Fifth District.

Holmes argued that despite Zurich’s claims, there were two final orders from the Division of Workers Compensation subject to judicial enforcement, a compensability order and a medical necessity order. The Court of Appeals examined whether that meant Holmes had properly exhausted his remedies with the Division. The Court determined that since the Division had exclusive jurisdiction over compensation matters, including entitlement to compensation benefits, suing in court for damages circumvented the Division’s rightful role. The Court then determined that the final order from the Independent Review Organization applied just to whether spinal surgery was medically necessary, not to whether Zurich should pay for the procedure. Zurich still had an opportunity to argue its case before the administrative body.

The Court affirmed the trial court’s summary judgment ruling, stating that both parties needed to argue their case before the Division of Workers Compensation before either could file a lawsuit in court.

Those who have been injured in a workplace accident could be entitled to workers compensation, as well as compensation from any third party responsible. The experienced San Antonio personal injury attorneys at Carabin Shaw may be able to help. Call our office today for more information at 1-800-862-1260.

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