Opinion filed July 19, 2012




                                             In The


   Eleventh Court of Appeals
                                           __________

                                      No. 11-10-00235-CV
                                          __________

                              CRAIG CARPENTER, Appellant

                                                V.

   SOUTHWEST MEDICAL EXAMINATION SERVICES, INC., Appellee


                              On Appeal from the 244th District Court

                                       Ector County, Texas

                                Trial Court Cause No. C-127,252-B


                                          OPINION
       This is an appeal from a summary judgment in a suit arising from the processing of a
workers’ compensation claim. We affirm.
                                         Background Facts
       Craig Carpenter suffered an on-the-job injury on November 30, 2007. Liberty Insurance
Corporation (Liberty) was the workers’ compensation carrier providing coverage for Carpenter’s
claim. In January 2008, Liberty denied Carpenter’s request for knee surgery based on its
determination that the requested surgery would be treating a preexisting condition. Liberty
subsequently requested the Texas Department of Insurance, Division of Workers’ Compensation,
(the Division) to name a “designated doctor” to examine Carpenter. See TEX. LAB. CODE ANN.
§ 408.0041 (West Supp. 2011).1 The Division named Dr. Robert Stumhoffer as the designated
doctor to examine Carpenter. Dr. Stumhoffer examined Carpenter on May 9, 2008.
Dr. Stumhoffer concluded that the intended knee surgery was related to a preexisting condition
and that Carpenter had reached maximum medical improvement.
       Southwest Medical Examination Services, Inc. (Southwest) is a company that provides
various administrative services to companies and physicians involved in the workers’
compensation insurance field. As related to this appeal, Southwest provided administrative
services to both Liberty and Dr. Stumhoffer in connection with Carpenter’s claim. Liberty
retained Southwest to file with the Division the form requesting the assignment of a designated
doctor to examine Carpenter. After the Division named Dr. Stumhoffer as the designated doctor,
a registered nurse affiliated with Southwest provided Dr. Stumhoffer with “an analysis of the
injured employee’s medical condition, functional abilities, and return-to-work opportunities” on
behalf of Liberty. See Section 408.0041(c). With respect to Dr. Stumhoffer, Southwest provided
him with administrative services consisting of scheduling, billing, transcription, and a location
for his examination.
       Following Dr. Stumhoffer’s examination of Carpenter on May 9, 2008, representatives of
Liberty and Carpenter participated in a Benefit Review Conference (BRC) on May 20, 2008.2
One of the issues considered at the BRC was whether Dr. Stumhoffer should be removed as the
designated doctor because of a conflict of interest stemming from Southwest’s work for both Dr.
Stumhoffer and Liberty. The parties subsequently executed a written agreement wherein they
agreed as follows: “[T]he parties agree that the Division should appoint a second Designated
Doctor because any doctor from [Southwest] has at least the potential for a perceived conflict of
interest because the Carrier retained [Southwest] for a pre-DD medical review and any report
from [a Southwest] doctor in this case (AND ONLY THIS CASE) is NOT VALID.” Liberty

       1
        As per the Division’s website:
                 A designated doctor is a doctor selected by Texas Department of Insurance, Division of Workers’
       Compensation (TDI-DWC) to make a recommendation about an injured employee’s medical condition or to
       resolve a dispute about a work-related injury or occupational illness. The injured employee, the employee’s
       representative, the insurance carrier or TDI-DWC can request an examination by a designated doctor. TDI-
       DWC will determine if a designated doctor should be appointed to conduct the exam.
       2
        As per the Division’s website:
                 The BRC is an informal meeting held at a local TDI-DWC office where [the injured employee] will
       meet with someone from the insurance company to discuss the disputed issues in front of a TDI-DWC
       Benefit Review Officer. If the dispute is resolved, an agreement may be written and signed by [the injured
       employee] and the insurance carrier.
                                                           2
also agreed not to use Dr. Stumhoffer’s report “for any purpose.” The Division subsequently
named Dr. Phillip Robert Zeeck as the designated doctor to examine Carpenter. Dr. Zeeck
determined that the contemplated knee surgery was related to the on-the-job injury. Based upon
Dr. Zeeck’s determination, the parties entered into an agreement on September 23, 2008,
acknowledging that the planned surgery was related to the on-the-job injury.               Liberty
subsequently paid past benefits to Carpenter and approved the knee surgery in October 2008.
       Carpenter filed suit against Liberty, Dr. Stumhoffer, and Southwest on March 12, 2009.
He alleged that the defendants were liable to him under theories of common-law bad faith,
statutory bad faith, and fraud for the damages he allegedly incurred from Liberty’s delay in
paying benefits to him for five months. Carpenter subsequently amended his pleadings to
include alleged violations of the Insurance Code and the Deceptive Trade Practices-Consumer
Protection Act.3 He also alleged that Southwest engaged in a conspiracy to commit fraud.
Carpenter based these causes of action on the assertion that Southwest concealed the nature of
the relationship between it, Liberty, and Dr. Stumhoffer. Southwest filed a motion for partial
summary judgment alleging that it was not liable to Carpenter as a matter of law. The trial court
granted Southwest’s motion for partial summary judgment and severed all claims against
Southwest into a separate action so that the judgment in favor of Southwest would be final.
Carpenter challenges the summary judgment in a single issue on appeal.
                                                Standard of Review
       We review the trial court’s summary judgment de novo. Valence Operating Co. v.
Dorsett, 164 S.W.3d 656, 661 (Tex. 2005); Provident Life & Accident Ins. Co. v. Knott, 128
S.W.3d 211, 215 (Tex. 2003). A trial court must grant a traditional motion for summary
judgment if the moving party establishes that no genuine issue of material fact exists and that the
movant is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); Lear Siegler, Inc. v.
Perez, 819 S.W.2d 470, 471 (Tex. 1991). Once the movant establishes a right to summary
judgment, the nonmovant must come forward with evidence or law that precludes summary
judgment. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678–79 (Tex. 1979).
When reviewing a traditional summary judgment, the appellate court considers all the evidence
and takes as true evidence favorable to the nonmovant. Nixon v. Mr. Prop. Mgmt. Co., 690
S.W.2d 546, 548–49 (Tex. 1985). The appellate court “must consider whether reasonable and


       3
           See TEX. BUS. & COM. CODE ANN. § 17.41–.63 (West 2011 & Supp. 2011).
                                                           3
fair-minded jurors could differ in their conclusions in light of all of the evidence presented” and
may not ignore “undisputed evidence in the record that cannot be disregarded.” Goodyear Tire &
Rubber Co. v. Mayes, 236 S.W.3d 754, 755, 757 (Tex. 2007).
                                                         Analysis
         The basis of Carpenter’s causes of action is that Southwest should have disclosed its
relationship with both Liberty and Dr. Stumhoffer when the Division named Dr. Stumhoffer as
the designated doctor to examine him at Liberty’s request. Carpenter contends that Southwest
committed fraud and breached a duty of good faith and fair dealing by failing to disclose the
relationship. He contends that Southwest had a duty to disclose the relationship under the
Division’s administrative rules, the Labor Code, the Insurance Code, and the DTPA. In this
regard, 28 TEX. ADMIN. CODE § 180.21(m)(9) (2006) (Tex. Dep’t of Ins., Div. of Workers’
Comp., Div. Designated Doctor List) requires a designated doctor to notify the Division of a
“disqualifying association” after his or her appointment.4 Carpenter contends that this provision
placed a duty upon Southwest to disclose its relationship with Dr. Stumhoffer. Additionally,
Carpenter contends that Southwest violated a duty of good faith and fair dealing by virtue of its
association with Liberty. He also contends that Southwest engaged in a civil conspiracy with
Liberty and Dr. Stumhoffer to the extent that they failed to disclose the relationship.
         We note at the outset that the Texas Supreme Court recently issued an opinion in Texas
Mutual Insurance Co. v. Ruttiger, No. 08-0751, 2012 WL 2361697 (Tex. June 22, 2012), that
affects this appeal.         Ruttiger involved a lawsuit by an injured employee filed against his
employer’s workers’ compensation carrier. 2012 WL 2361697, at *1. The carrier initially
delayed paying benefits to the employee based upon its contention that his alleged injury did not
occur at work. Id. at *2. Within a few months of the carrier’s denial, the employee requested a
Benefit Review Conference. Id. The employee and the carrier entered into a benefit dispute
agreement at the conference wherein they agreed that the employee suffered a compensable
injury. Id. The employee filed suit against the carrier while the workers’ compensation claim
was still pending, alleging that the carrier had engaged in unfair claim settlement practices under
the Insurance Code and the DTPA by failing to properly investigate his claim for benefits. Id. at
*3. He also alleged that the carrier had violated the common-law duty of good faith and fair



         4
            The regulation defines a disqualifying association as “[a]ny association that may reasonably be perceived as having
potential to influence the conduct or decision of a doctor.” Section 180.21(a)(2).
                                                              4
dealing. Id. The employee asserted that he suffered damages because of the carrier’s delay in
paying benefits to him.
       The supreme court held that the regulatory scheme set out in the Workers’ Compensation
Act (the Act), as amended in 1989, precluded the injured employee’s causes of action regarding
the manner in which the carrier had handled the processing of his workers’ compensation claim.
Ruttiger, 2012 WL 2361697; see TEX. LAB. CODE ANN. tit. 5 (West 2006 & Supp. 2011). The
court began its analysis by noting that the 1989 amendments to the Act contained significant
changes, including reforms to the dispute resolution process. Ruttiger, 2012 WL 2361697, at *1.
The court recognized:
               The 1989 amendments and the current Act provide significantly more
       meaningful proceedings at the administrative agency level so as to reduce the
       number and costs of judicial trials, speed up the time for the entire dispute
       resolution process, and facilitate interlocutory payment of benefits pending final
       resolution of disputes. To achieve these purposes the amended Act contains
       detailed procedures and penalties for failures of the various interested parties to
       comply with statutory and regulatory requirements.

              ....

                The purpose of the Act is to provide employees with certainty that their
       medical bills and lost wages will be covered if they are injured. An employee
       benefits from workers’ compensation insurance because it saves the time and
       litigation expenses inherent in proving fault in a common law tort claim. But a
       subscribing employer also receives a benefit because it is then entitled to assert
       the statutory exclusive remedy defense against the tort claims of its employees for
       job related injuries.

              ....

               To accomplish these purposes, the Act provides detailed notice and
       administrative dispute resolution proceedings that include specific deadlines and
       incorporate a “conveyor-belt” approach. That is, once the administrative dispute
       resolution process is initiated, a dispute continues through the process until the
       dispute is resolved either by the parties or by a binding decision through the
       resolution procedures.

              ....

              It is apparent that the Act prescribes detailed, [Division]-supervised, time-
       compressed processes for carriers to handle claims and for dispute resolution. It
       has multiple, sometimes redundant but sometimes additive, penalty and sanction
       provisions for enforcing compliance with its requirements.

                                                5
Id. at *7–10 (internal citations omitted).
       The court concluded that a separate cause of action under the Insurance Code alleging the
untimely processing of a claim by a workers’ compensation carrier would be inconsistent with
the Act. Id. at *10. In this regard, the court acknowledged that the Act contained comprehensive
guidelines for the timely resolution of claims. The court additionally noted that permitting a
cause of action independent of the Act would undermine the Act’s goal of promptly resolving
claims because the employee would have an incentive to delay seeking redress in the
administrative system in order to increase his damages. Id. at *10–11.
       The court in Ruttiger also addressed the duty of good faith and fair dealing that it had
previously recognized in Arnold v. National County Mutual Fire Insurance Co., 725 S.W.2d
165, 167 (Tex. 1987), and had extended to workers’ compensation carriers in Aranda v.
Insurance Co. of North America, 748 S.W.2d 210 (Tex. 1988). Id. at *14. The court concluded
that “the Legislature has substantially remedied the deficiencies that led to this Court’s extending
a cause of action under Arnold for breach of the duty of good faith and fair dealing to the
workers’ compensation system.” Id. at *17. Accordingly, the court overruled Aranda by holding
that an injured employee may not assert a common-law claim for breach of the duty of good faith
and fair dealing against a workers’ compensation carrier. Id. at *1, *19.
       The holding in Ruttiger applies to the causes of action asserted by Carpenter. As was the
case in Ruttiger, Carpenter is asserting a common-law cause of action for breach of the duty of
good faith and fair dealing against Southwest by virtue of its relationship with Liberty. Under
Ruttiger, this cause of action would not be viable against Liberty. Given the derivative nature of
Carpenter’s claim, we conclude that Ruttiger precludes a common-law claim for breach of the
duty of good faith and fair dealing against an entity sued as a result of its affiliation with a
workers’ compensation carrier.
       Ruttiger also establishes that Carperter’s other claims are precluded by the Act. The
basis of his complaints is that Southwest had a duty to disclose the relationship. He relies on
provisions of the administrative regulations and statutes governing the disclosure requirements of
a designated doctor to contend that Southwest had a duty to disclose. As was the case in Ruttiger
where the Act and its attendant regulations contained extensive guidelines and penalties for the
prompt investigation of claims, the Act and regulations contain comprehensive measures
regulating the applicable disclosure requirements. The Act also provides various administrative
sanctions for the failure to comply with the disclosure requirements. See 28 TEX. ADMIN. CODE
                                                 6
§ 180.26 (2011) (Tex. Dep’t of Ins., Div. of Workers’ Comp., Criteria for Imposing,
Recommending and Determining Sanctions; Other Remedies). Furthermore, the Act provides
for the prompt resolution for disputes of this type. Carpenter presented his complaint concerning
a perceived conflict of interest within two weeks after Dr. Stumhoffer examined him. Carpenter
successfully obtained the disputed benefits within roughly the same time frame as the claimant in
Ruttiger. Accordingly, we hold that the Act provides the exclusive dispute procedures for the
claims asserted by Carpenter.
       Moreover, Southwest’s liability to Carpenter is precluded because Southwest had no
contractual relationship with Carpenter. Southwest’s relationship with Carpenter is quite similar
to that of an independent adjuster. The Texas Supreme Court held in Natividad v. Alexsis, Inc.,
875 S.W.2d 695, 698 (Tex. 1994), that an independent adjusting firm does not owe an insured a
duty of good faith and fair dealing. Citing Natividad, the court in Dear v. Scottsdale Ins. Co.,
947 S.W.2d 908, 916–17 (Tex. App.—Dallas 1997, writ den’d), disapproved of on other grounds
by Apex Towing Co. v. Tolin, 41 S.W.3d 118, 122–23 (Tex. 2001), held that an independent
adjusting firm cannot be liable to an insured for improper investigation and settlement advice
regardless of whether the insured phrased his allegations as negligence, bad faith, breach of
contract, tortious interference, or DTPA. See Crocker v. Am. Nat’l Gen. Ins. Co., 211 S.W.3d
928, 937–38 (Tex. App.—Dallas 2007, no pet.); Dagley v. Haag Eng’g Co., 18 S.W.3d 787,
790–93 (Houston [14th Dist.] 2000, no pet.) (also holding that an independent adjuster cannot be
held liable under the Insurance Code in addition to negligence, bad faith, breach of contract,
tortious interference, and DTPA claims). This reasoning is applicable to Southwest given its role
of providing administrative services to Liberty and Dr. Stumhoffer without any independent
contractual relationship with Carpenter. Accordingly, the trial court did not err in granting
summary judgment in favor of Southwest. Appellant’s sole issue is overruled.
                                       This Court’s Ruling
        The judgment of the trial court is affirmed.




July 19, 2012                                                TERRY McCALL
Panel consists of: Wright, C.J.,                             JUSTICE
McCall, J., and Kalenak, J.


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