
TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN






NO. 03-00-00771-CV



Kittie H. Perkins, Lowell L. Perkins, Steven G. Perkins, Randall L. Perkins,
and Kristi L. Perkins Jernigan, Appellants


v.



Group Life & Health Insurance Company, Appellee





FROM THE DISTRICT COURT OF TRAVIS COUNTY, 250TH JUDICIAL DISTRICT

NO. 98-07907, HONORABLE SUZANNE COVINGTON, JUDGE PRESIDING






	Appellee Group Life & Health Insurance Company (Group Life) filed an action in
district court seeking a declaratory judgment that Group Life owes no prejudgment interest on an
insurance claim paid to appellants, Kittie H. Perkins, Lowell L. Perkins, Steven G. Perkins, Randall
L. Perkins, and Kristi L. Perkins Jernigan (the Perkins family), following the accidental death of a
state employee, Glen E. Perkins.  Group Life initially refused to pay the supplemental death benefit
because it maintained that Perkins's death was not accidental.  This refusal to pay was upheld by the
Employees Retirement System of Texas (ERS), which governs the disposition of claims filed
through its benefits program.  After seven years of administrative litigation, ERS finally determined
that Perkins's death was accidental, and Group Life paid the death benefit in the amount of
$141,000.  Group Life filed for declaratory judgment in response to the Perkins family's demand for
prejudgment interest on the benefit.  Both sides filed motions for summary judgment.  The district
court granted Group Life's summary-judgment motion and denied the Perkins family's motion.  The
Perkins family appeals.  Because the relevant statute does not entitle appellants to prejudgment
interest and grants ERS the exclusive authority to decide "all questions relating to enrollment in or
payment of claims arising from programs or coverages provided under" Perkins's insurance policy,
we hold that the Perkins family may not recover prejudgment interest on the benefit.  Consequently,
we affirm the trial court's judgment.

FACTUAL AND PROCEDURAL BACKGROUND
	Perkins, a Department of Public Safety trooper, attended a troopers' convention in
Eufala, Oklahoma and fractured his ankle as he stepped out of a vehicle on April 30, 1990.  Doctors
in Oklahoma x-rayed and splinted the ankle and told Perkins to have his ankle treated when he
returned to his home in Irving, Texas.
	Upon his return, Perkins consulted Dr. James Frost, an orthopedic surgeon, who
advised Perkins to have the ankle repaired through surgery.  During the course of surgery, an
anesthesiologist administered general anesthesia to Perkins.  Perkins lost blood pressure, went into
cardiac arrest, and died as a direct result of the cardiac arrest.
	As a state employee, Perkins participated in the group benefits program offered
through ERS.  The policy was administered by Group Life under the authority of ERS.  Under article
3.50-2 of the Texas Insurance Code, ERS has the authority to contract with "a qualified, experienced
firm of group insurance specialists who shall act for the trustee [State Board of Trustees that
administers ERS] in a capacity as independent administrators and managers of the programs
authorized under this Act."  Act of April 17, 1975, 64th Leg., R.S., ch. 79, § 4, 1975 Tex. Gen. Laws
208, 211 (Tex. Ins. Code Ann. art. 3.50-2, § 4, since amended).  Group Life administered Perkins's
insurance policy in accordance with article 3.50-2.  See id.
	The Perkins family made a claim on Perkins's life insurance policy, which included
an accidental death and dismemberment benefits supplement.  Group Life denied accidental death
benefits to the Perkins family in August 1990, maintaining that Perkins's death was the result of
multiple events and conditions, including massive lymphadenopathy and sarcoidosis, (1) which are
latent health conditions that precluded a finding of accidental death under Group Life's definition
of the term.
	In September 1990, the Perkins family asked for the denial to be reconsidered, and
Group Life reaffirmed the denial after re-examination of the facts.  The Perkins family appealed the
denial to the Executive Director of ERS a year later, and in December 1991, ERS told the Perkins
family that it had determined that Group Life was "contractually correct" in denying the benefits. 
The Perkins family appealed this decision to the Board of Trustees of ERS; a hearing was conducted
in March 1993 before an administrative law judge (ALJ).  In January 1994, the ALJ issued a
proposal for decision that determined that Perkins's death was proximately caused by the
administration of anesthesia in ignorance of the underlying sarcoidosis, and not the sarcoidosis itself. 
This distinction led the ALJ to conclude that Perkins's death was accidental under the terms of the
insurance policy.  Seven years after Perkins's death, ERS approved the claim for accidental death
benefits, and Group Life paid the Perkins family $141,000 on the policy.  It denied the family's
demand for interest on $141,000 over the seven-year period between the trooper's death and the date
of payment, some $76,681.77.

DISCUSSION

	The Perkins family claims the trial court erred in granting Group Life's motion for
summary judgment and denying summary judgment in its favor.  The propriety of summary
judgment in this case is a question of law; therefore, we review the trial court's decision de novo. 
McCarthy Bros. Co. v. Cont'l Lloyds Ins. Co., 7 S.W.3d 725, 728 (Tex. App.--Austin 1999, no pet.). 
When both sides move for summary judgment and the trial court grants one motion and denies the
other, we review the summary-judgment proof presented by both sides and determine all questions
presented.  Comm'rs Court v. Agan, 940 S.W.2d 77, 81 (Tex. 1997).  If we find error, we must
render the judgment the trial court should have entered.  Id. 
	The Perkins family asks that we find that the family is entitled to prejudgment interest
on the $141,000 death benefit under section 302.002 of the Texas Finance Code.  See Act of May
22, 1997, 75th Leg., R.S., ch. 1008, § 1, 1997 Tex. Gen. Laws 3091, 3422 (Tex. Fin. Code Ann.
§ 302.002, since amended).  The governing provision indicates that "[w]hen no specified rate of
interest is agreed on by the parties, interest at the rate of six percent per year is allowed on all
accounts and contracts ascertaining the amount payable, beginning on the 30th day after the date on
which the amount is due and payable."  Id. (2)  The Perkins family posits that contract law applies in
this case, and therefore that section 302.002 governs the policy.  The only issue before us is whether
section 302.002 applies to a policy of insurance administered by ERS.  Following our decisions in
Beyer v. Employees Ret. Sys., 808 S.W.2d 622 (Tex. App.--Austin 1991, writ denied), and Butler
v. Group Life & Health Ins. Co., 962 S.W.2d 296 (Tex. App.--Austin 1998, no pet.), we hold that
it does not.
	The Texas Employees Uniform Group Insurance Benefits Act established a plan for
the purchase of group life, accident, and health insurance for state employees.  Tex. Ins. Code Ann.
art. 3.50-2 (West 1981 & Supp. 2001).  The administration and implementation of the Act is vested
solely with ERS, and its executive director has the exclusive authority to decide "all questions
relating to enrollment in or payment of claims arising from programs or coverages provided under
authority of this Act."  Id. art. 3.50-2, § 4B(a) (West Supp. 2001).  Thus, Perkins's insurance
coverage was created by the legislature.  See Employees Ret. Sys. v. Blount, 709 S.W.2d 646, 647
(Tex. 1986); see also Montgomery v. Blue Cross & Blue Shield of Tex., Inc., 923 S.W.2d 147, 151
(Tex. App.--Austin 1996, writ denied).  As such, the Perkins family's cause of action derives from
statute, not common law, and the "statutory provisions are mandatory and exclusive and must be
complied with in all respects."  See Blount, 709 S.W.2d at 647. 
	In Beyer, ERS awarded the beneficiary her insurance claim but rejected her request
for statutory interest under section 3.62 of the Insurance Code and for attorney's fees.  On appeal,
this Court held that article 3.50-2 did not grant the beneficiary the legal right to recover such
additional sums and that section 3.62 of the Insurance Code could not be construed to apply to an
ERS insurance proceeding if the ERS itself did not choose to apply it. Beyer, 808 S.W.2d at 627.
	In Butler, the beneficiary of a policy administered by ERS relied on a slight
amendment to the language of section 3.62, now embodied in section 21.55 of the insurance code,
to seek a different result.  We found no distinction and, applying Beyer, reached the same result. 
Butler, 962 S.W.2d at 301-02.  Article 3.50-2 provides the exclusive remedy for a claim on a policy
administered by ERS, id.; because article 3.50-2 does not explicitly grant a right to prejudgment
interest, there is no such right under a different statutory scheme unless the ERS chooses to apply
that other provision.
	The Perkins family seeks interest under section 302.002 of the Finance Code rather
than article 21.55 of the Insurance Code, but the result is the same.  Article 3.50-2 creates an
insurance scheme, grants to ERS the right to determine "all questions relating to enrollment in or
payment of claims," and does not grant to policyholders or beneficiaries a legal right to prejudgment
interest.  Tex. Ins. Code Ann. art. 3.50-2, § 4B(a).  The ERS thus has the discretion to pay or not pay
interest offered under other statutory schemes governing other insurance policies.  See id.  The
Perkins family asserts that Beyer and Butler are distinguishable because they arose from
administrative decisions of the ERS that were judicially reviewed by the courts, whereas this
decision was initially imposed by the district court in a declaratory judgment proceeding.  Article
3.50-2 governs in either instance and our decisions in Beyer and Butler compel our decision that
Article 3.50-2 is the exclusive remedy for policyholders or beneficiaries bringing claims on an
insurance policy administered by the ERS.

CONCLUSION

	Because we determine that section 302.002 of the Finance Code does not apply to an
insurance policy administered by ERS, we affirm the trial court's summary judgment in favor of
Group Life.


  
					Bea Ann Smith, Justice
Before Justices Kidd, B. A. Smith and Puryear
Affirmed
Filed:   May 31, 2001
Publish
1.   Sarcoidosis is defined in the administrative law judge's proposal for decision as a disorder
of the immune system of unknown cause, which leads to mediastinal lymphadenopathy, a swelling
of the lymph glands in the middle of the chest adjacent to the heart, in between the lungs, and
between the breastbone and the spine.  
2.   The recent amendment to section 302.002 does not change our result.  See Tex. Fin. Code
Ann. § 302.002 (West Supp. 2001).


.  Tex. Ins. Code Ann.
art. 3.50-2 (West 1981 & Supp. 2001).  The administration and implementation of the Act is vested
solely with ERS, and its executive director has the exclusive authority to decide "all questions
relating to enrollment in or payment of claims arising from programs or coverages provided under
authority of this Act."  Id. art. 3.50-2, § 4B(a) (West Supp. 2001).  Thus, Perkins's insurance
coverage was created by the legislature.  See Employees Ret. Sys. v. Blount, 709 S.W.2d 646, 647
(Tex. 1986); see also Montgomery v. Blue Cross & Blue Shield of Tex., Inc., 923 S.W.2d 147, 151
(Tex. App.--Austin 1996, writ denied).  As such, the Perkins family's cause of action derives from
statute, not common law, and the "statutory provisions are mandatory and exclusive and must be
complied with in all respects."  See Blount, 709 S.W.2d at 647. 
	In Beyer, ERS awarded the beneficiary her insurance claim but rejected her request
for statutory interest under section 3.62 of the Insurance Code and for attorney's fees.  On appeal,
this Court held that article 3.50-2 did not grant the beneficiary the legal right to recover such
additional sums and that section 3.62 of the Insurance Code could not be construed to apply to an
ERS insurance proceeding if the ERS itself did not choose to apply it. Beyer, 808 S.W.2d at 627.
	In Butler, the beneficiary of a policy administered by ERS relied on a slight
amendment to the language of section 3.62, now embodied in section 21.55 of the insurance code,
to seek a different result.  We found no distinction and, applying Beyer, reached the same result. 
Butler, 962 S.W.2d at 301-02.  Article 3.50-2 provides the exclusive remedy for a claim on a policy
administered by ERS, id.; because article 3.50-2 does not explicitly grant a right to prejudgment
interest, there is no such right under a different statutory scheme unless the ERS chooses to apply
that other provision.
	The Perkins family seeks interest under section 302.002 of the Finance Code rather
than article 21.55 of the Insurance Code, but the result is the same.  Article 3.50-2 creates an
insurance scheme, grants to ERS the right to determine "all questions relating to enrollment in or
payment of claims," and does not grant to policyholders or beneficiaries a legal right to prejudgment
interest.  Tex. Ins. Code Ann. art. 3.50-2, § 4B(a).  The ERS thus has the discretion to pay or not pay
interest offered under other statutory schemes governing other insurance policies.  See id.  The
Perkins family asserts that Beyer and Butler are distinguishable because they arose from
administrative decisions of the ERS that were judicially reviewed by the courts, whereas this
decision was initially imposed by the district court in a declaratory judgment proceeding.  Article
3.50-2 governs in either instance and our decisions in Beyer and Butler compel our decision that
Article 3.50-2 is the exclusive remedy for policyholders or beneficiaries bringing claims on an
insurance policy administered by the ERS.

CONCLUSION

	Because we determine that section 302.002 of the Finance Code does not apply to an
insurance policy administered by ERS, we affirm the trial court's summary judgment in favor of
Group Life.


  
					Bea Ann Smith, Justice
Before Justices Kidd, B. A. Smith and Puryear
Affirmed
Filed:   May 31, 2001
Publish
1.   Sarcoidosis is defined in the administrative law judge's proposal for decision as a disorder
of the immune system of unknown cause, which leads to mediastinal lymphadenopathy, a swelling
of the lymph glands in the middle of the chest adjacent to the heart, in between the lungs, and
between the breastbone and the spine.  
2.   The recent amend