East Texas Educational Insurance Association v. Sanford Jones and James Thomas Lyle, as Independent Executor of the Estate of Mary Louise Jones, Deceased, and Next Friend of J.L., a Minor

Summary

The Ninth Court of Appeals of Texas considers whether the trial court properly determined East Texas Educational Insurance Association’s workers’ compensation subrogation lien during a settlement hearing. The court holds that the trial court abused its discretion by summarily adjudicating the carrier’s claim and effectively denying reimbursement for medical benefits without a trial on the merits or summary-judgment proceedings. The court reverses and remands for further proceedings.

Holdings

1. A trial court may not resolve disputed fact issues concerning a workers' compensation carrier's subrogation claim and reimbursement amount simply through a settlement-related motion and hearing. The dispute must be resolved by a trial on the merits, a properly conducted summary-judgment proceeding, a valid settlement agreement, or another method authorized by the procedural rules.
2. Under Texas Labor Code section 417.002(a), a workers' compensation carrier has a mandatory right to reimbursement from the net amount recovered in a third-party action for benefits, including medical benefits, paid for the compensable injury; the carrier is entitled to the first money up to the amount of benefits paid.
3. Remand, rather than rendition of judgment on the $350,000 medical-benefit payment, was required because the lack of procedural due process prevented a valid adjudication of the merits.

Questions Presented

1. Whether the trial court improperly adjudicated ETEIA's workers' compensation subrogation claim and reimbursement amount at a settlement hearing rather than through a trial on the merits, summary judgment, or another procedurally authorized method.
2. Whether the trial court summarily put ETEIA to trial in violation of Texas Rule of Civil Procedure 245 and due process.
3. Whether the trial court erred by failing to award reimbursement for ETEIA's $350,000 payment to TRS-ActiveCare for medical benefits.
4. Whether ETEIA waived its complaints concerning notice, the reimbursement amount, and Texas Labor Code sections 409.009 and 409.0091.

Disposition

reversed_and_remanded