

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
 

 
                                                                  O
P I N I O N
            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 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
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 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.  
 
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 § 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.




[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.


[3]See Tex. Bus. & Com. Code Ann. § 17.41–.63
(West 2011 & Supp. 2011).


[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).


