Justice Willett delivered the opinion of the Court, in which Chief Justice Hecht, Justice Green, Justice Johnson, Justice Guzman, Justice Lehrmann, Justice Devine, and Justice Brown joined.
The Texas workers' compensation regime was overhauled just over a quarter-century ago amid complaints of high costs for employers and low benefit rates for workers — inefficiencies that had reached "crisis proportions."
The Legislature, concerned with attorney involvement in even the most routine, small-dollar claims, determined that one way to control costs was to constrain judicial review of agency determinations. Another cost-cutting reform: a formula that precisely provides how certain benefits are to be calculated. Eligibility for benefits requires satisfaction of detailed and particular conditions, and courts do not have carte blanche to approve settlements awarding benefits that clash with these criteria. Where supplemental income benefits are concerned, settlements cannot bypass
Bonnie Jones was injured in 2005 during the course of her employment. Her employer's comp carrier, American Home Assurance Company (American Home), paid her various benefits. She later made three claims for supplemental income benefits (SIBs) for the periods known as the twelfth, fourteenth, and fifteenth quarters of 2011. The parties disagreed over whether Jones was entitled to SIBs for the fourteenth quarter.
Jones then sued American Home in district court, arguing she was entitled to SIBs for the fourteenth quarter. The Department of Insurance's Division of Workers' Compensation (Division) intervened after receiving a proposed judgment approving the settlement at issue here. Under the settlement, Jones and American Home agreed that Jones was entitled to a partial award of SIBs, amounting to $1,572.90. The Division drew attention to the administrative determination that Jones had not fulfilled the mandatory work search requirements for the fourteenth quarter, and that a partial SIBs award flouts the statutory formula's edict to calculate the monetary entitlement in a precise way.
The trial court approved the proposed settlement, and the Division appealed. The court of appeals did not address whether the trial court should have considered whether Jones satisfied the requisite work-search requirements. Homing in on a general policy of encouraging settlement, and ignoring the particularities that the revamped workers' comp scheme provides, the court of appeals affirmed the trial court's judgment.
Injured workers are eligible for SIBs when they satisfy precise criteria, and the Labor Code forbids settlements that provide awards when these requirements have not been met.
The Code allows parties to seek judicial review
An employee may also receive benefits if she has "reasonable grounds for failing to comply with the work search requirements."
Moreover, an injured worker seeking SIBs must demonstrate that "he or she has, each week during the qualifying period, made the minimum number of job applications and or work search contacts consistent with the work search contacts established by TWC which are required for unemployment compensation in the injured employee's county of residence."
Thus, an injured worker must fully meet the necessary minimum work search requirements in order to be SIBs-eligible. In this case, the parties dispute whether Jones made the necessary number of work searches during the fourteenth quarter in order to qualify for SIBs during that period. The Division made a finding of fact that she did not-a finding that Jones appealed. However, the trial court did not make a factual determination concerning Jones's work-search attempts, if she made any at all. The possibility therefore exists that she did not meet the Code's strict work-search requirements, and that as a result she is not entitled to SIBs for the fourteenth quarter as a matter of law. For the court to approve a settlement that awards Jones "partial" SIBs in this context is a far cry from the approval of only those settlements that adhere to all appropriate provisions of the Code.
When there is no dispute over whether the worker satisfied the eligibility requirements during a particular quarter, a court can still approve settlements of SIBs claims.
It is important to note that parties can still settle certain disputes over SIBs awards. Where there is no disagreement that a worker has or has not satisfied the strict eligibility requirements, a court can approve settlements of those claims.
The Labor Code and Division regulations provide a detailed formula for the calculation of SIBs, and this formula is one of the "appropriate provisions of law" to which all SIBs settlements must adhere.
The Texas Labor Code provides a tight framework for court approval of workers' compensation settlements. A comp claim may not be settled "contrary to the provisions of the appeals panel decision issued on the claim or issue unless a party to the proceeding has filed for judicial review."
The Labor Code makes clear that only court-approved workers' compensation settlements are allowed, and in turn, that court approval is contingent upon the settlement's compliance with the rest of the Workers' Compensation Act.
The Code contains a precise formula for calculating the amounts of SIBs to which an injured worker is entitled: "[T]he amount ... for a week is equal to 80 percent of the amount computed by subtracting the weekly wage the employee earned during the reporting period ... from 80 percent of the employee's average weekly wage ...."
The Division's applicable regulation, promulgated pursuant to the Labor Code,
We construe the Workers' Compensation Act, like other statutes, by considering the plain meaning of the text, given the statute as a whole.
The verb "to adhere" means "to bind oneself to observance."
The adjective "appropriate" denotes that which is "specially suitable" with respect to the word or phrase it modifies.
The Legislature's detailed and precise formula that governs the calculation of the amount of SIBs to which injured workers are entitled is a particularly "appropriate" provision of law. Further, a court can only approve a SIBs award made in accordance with Subchapter H of the Code — the very subchapter that contains the formula. Therefore, we hold that a court can only approve settlements that are strictly consistent with — indeed, settlements which "adhere to" — the formula for calculating SIBs awards.
The plain language of the Code lays out a prescription for calculating the amount of SIBs that injured workers are entitled to receive, and courts may only approve settlements that adhere to the formula. Courts cannot approve a settlement for a dollar value that is not "equal to" the output of the formula as applied to facts particular to the injured employee, such as his average weekly wage.
The Legislature extensively reformed the workers' compensation framework in order to discourage opportunistic suits seeking small-money judgments — suits prone to generating settlement awards regardless of their underlying merits.
We acknowledge that civil litigants are generally free to settle whenever, and on whatever terms, they wish. Parties naturally weigh potential costs and benefits
As noted above, while the Workers' Compensation Act provides for the possibility of settlement, it also includes the cautionary language — not usually found where other causes of action are concerned — that bars court approval of settlements that do not adhere to all appropriate provisions of law.
Indeed, as we have previously — and repeatedly — emphasized, the chief problem with the old workers' comp framework was that the unfettered ability to seek de novo judicial review spurred parties to treat the administrative forum as a mere "way station" to the courthouse.
We hold that settlement of workers' compensation disputes is tightly restricted to only those settlements that strictly comply with the meticulous governing Code provisions at hand. SIBs awards are typically relatively small compared with the costs of going to trial, and as a result are particularly vulnerable to the sort of nuisance suits that the Legislature sought to curb. If an injured worker is not eligible for SIBs, but is aware that the employer's insurer would rather pay some fraction of the formula's output instead of going to trial to prove the suit non-meritorious, there is a perverse incentive to appeal any of the Division's decisions not to award SIBs. It is this sort of opportunism that the Code is designed to curtail.
The Code's requirement that settlements comply with "all appropriate provisions of law" extends beyond those statutory requirements relating specifically to settlements.
Again, our ruling will not do away with all settlements. For example, the claimant and carrier could, under our decision, agree that the claimant was eligible for SIBs in one period but not another, and settle the case accordingly. We see no reason the trial court could not accept the parties' uncontested representations regarding the eligibility requirements or an applicable exception to meeting those requirements. In this case, the parties agreed that Jones was not entitled to SIBs for the twelfth quarter, and was entitled to SIBs for the fifteenth quarter. The Division does not complain of a settlement where the parties agree to full SIBs under statutory formulae for one period but no recovery for another period, nor do we. Further, our decision would not require the trial court independently to make eligibility findings where neither side is willing to proffer evidence on and otherwise litigate the issue. We do not suggest such an unworkable result, nor does any reasonable construction of the Code. Prohibiting a partial settlement for amounts inconsistent on their face with statutory requirements
Finally, we do not agree with Jones that settlement of all issues relating to a claim for SIBs in a particular quarter is not a settlement at all, but only an "agreement" under the Code. If all issues relating to that claim are resolved, the resolution is by definition a "settlement" "of all the issues" relating to that "workers' compensation claim."
* * *
Texas workers' compensation law embodies countless policy choices. Regardless of general public policy promoting settlement, it is evident that in the area of workers' compensation, and SIBs awards in particular, the Labor Code limits judicial review of agency award determinations. The Legislature's careful workers' comp scheme is phrased in mandatory, not permissive, language.
A SIBs settlement cannot recast a mandatory formula to have a discretionary application. Neither can a court — explicitly commanded to approve only those settlements that comply with all appropriate provisions of law — condone a settlement for a "partial" SIBs award without considering whether or not the worker has satisfied the threshold work-search requirements.
Accordingly, we reverse the court of appeals' judgment and remand the case to the trial court for further proceedings consistent with this opinion.
Justice Boyd filed a dissenting opinion.
Justice Boyd, dissenting.
The Court holds that the Texas Workers' Compensation Act prohibits trial courts from approving settlements that award supplemental income benefits unless the settlement complies with all of the Act's provisions governing an award of such benefits. Because I would hold that the Act prohibits courts from approving
To be entitled to supplemental income benefits (SIBs) under the Texas Workers' Compensation Act, an employee must meet several statutory requirements. TEX. LAB. CODE § 408.142(a).
An insurance carrier may dispute the employee's entitlement to SIBs, the amount of the SIBs, or both. Id. § 408.147(a).
Through all of these stages of the dispute-resolution process, the Act encourages the parties to reach agreements and settlements to resolve their disputes.
The parties' right to settle their disputes, however, is not unlimited; the Act imposes several specific requirements and restrictions on settlements. For example, a settlement generally cannot provide for a lump-sum payment of benefits. Id. §§ 408.005(a), 410.256(c)(1). In addition, the parties cannot agree to limit or terminate an employee's right to medical benefits. Id. §§ 408.005(b), 410.256(c)(2). And if the parties dispute the extent of the employee's impairment, they cannot agree to resolve that issue before the employee reaches "maximum medical improvement," and any such settlement or agreement must use the Act's impairment rating guidelines. Id. §§ 408.005(c), 410.256(d).
Moreover, throughout the stages of the dispute-resolution process, the commissioner — and at the judicial-review stage, the court — must approve any settlement. If a dispute is resolved during the administrative process, the commissioner must confirm that the settlement "accurately reflects the agreement between the parties," "reflects adherence to all appropriate provisions of law and the policies of the division," and "is in the best interest of the claimant." Id. § 408.005(e) (emphasis added). Similarly, once a party files suit for judicial review, the trial court must approve any settlement, but only if it "accurately reflects the agreement between the parties," "adheres to all appropriate provisions of the law," and "is in the best interest of the claimant." Id. § 410.256(b) (emphasis added).
Before a court can approve a settlement, the party who filed the suit must file a copy of the proposed settlement with the division, and the commissioner must review it "to determine compliance with all appropriate provisions of the law." Id. § 410.258(c) (emphasis added). If the commissioner determines that the proposed settlement "is not in compliance with the law," the commissioner may intervene and "inform the court of each reason the commissioner believes the proposed judgment or settlement is not in compliance with the law." Id. § 410.258(c), (e) (emphases added). Finally, any settlement "approved without complying with the requirements" to notify the commissioner or that "on its face does not comply with" the court-approval requirements "is void." Id. §§ 410.256(g), 410.258(f).
The Act thus makes it exceedingly clear that any settlement of a claim for workers' compensation benefits, including SIBs, must adhere to and comply with all "applicable provisions of the law." But "applicable" to what? The Court construes this phrase to refer to all of the Act's requirements
I disagree. I would hold that the Act requires that settlements adhere to provisions that are "applicable" not to awards of SIBs but to settlements of claims seeking such awards. As the Court notes, the provisions that require settlements to adhere to and comply with all "applicable" provisions govern settlements of all claims for all types of workers' compensation benefits, not just claims for SIBs.
The Court's construction would require the commissioner and courts to ensure that settlements adhere to all requirements for an award of SIBs, not just those that govern the award's amount. This is so because the provisions that govern the award's amount are not the only provisions that are "especially suitable" or "particularly pertinent" to SIBs awards. The provisions that govern an employee's entitlement to SIBs are just as "suitable" and "pertinent" to a SIBs award. If, as the Court concludes, the commissioner and trial courts can only approve a settlement awarding SIBs when the amount actually matches the amount the statutory formula would permit, then it necessarily follows that they can only approve the settlement
The Court appears to agree that its construction requires courts to ensure that settlements comply with the Act's entitlement provisions as well as the provisions that govern the award's amount.
The first problem with the Court's construction is that it is simply not logical. If (as the Court holds) the trial court must ensure that all settlements adhere to and comply with all provisions that are applicable to SIBs awards, and if (as the Court concedes) the entitlement provisions are "applicable" to SIBs awards, then the Act requires courts to ensure that settlements adhere to and comply with the entitlement provisions. Under the Act's plain language, the parties' agreement to settle a dispute over the employee's entitlement to SIBs triggers the court's duty to ensure that the settlement complies with the entitlement provisions. That agreement to settle the entitlement dispute cannot then also be the fact that eliminates that same duty.
The second problem with the Court's construction is its failure to justify its attempt to distinguish between an agreement to settle an entitlement dispute and an agreement to settle a dispute over the award's amount. The only justification I can deduce from the Court's opinion is that, in the Court's view, the Act's entitlement provisions require "strict consisten[cy]" with "detailed and particular conditions," ante at 611, while the provisions that govern the award's amount provide a "detailed and precise formula," ante at 615, that "precisely provides how certain benefits are to be calculated," ante at 611; see ante at 616 (stating that the formula is "replete with precise percentages and invocations of mathematical operations such as subtractions of exact numerical amounts"). The Court thus seems to suggest that parties cannot agree to settle a dispute over an award's amount because, in light of the statutory formula, there is nothing to dispute at all. If that is the Court's premise, the Act proves the premise wrong because the calculation of a SIBs award's amount is no less subject to dispute than the employee's entitlement to that award.
Similarly, the parties may dispute the amount of the "weekly wage the employee earned during the reporting period." Id. § 408.144(b). For example, if an employee who claims to have no earnings during the reporting period was "offered a bona fide position of employment that the employee [was] capable of performing, given the physical condition of the employee and the geographic accessibility of the position to the employee," then "the employee's weekly wages are considered to be equal to the
In short, the formula for determining the amount of a SIBs award is not an automatic indisputable calculation, but depends instead on numerous facts that are as subject to dispute as the facts necessary to establish the employee's entitlement to such an award.
In this case, it appears the parties did not dispute the facts on which the Act determines the amount of the SIBs award, but instead agreed to "split the difference" as a means to resolve their dispute over the employee's entitlement to the award. This is what the Court seems to find so objectionable about this particular settlement. See ante at 613 ("For the court to approve a settlement that awards Jones `partial' SIBs in this context is a far cry from the approval of only those settlements that adhere to all appropriate provisions of the Code."). But our decision depends not on whether we find this settlement to be objectionable, but on whether the Act prohibits the trial court from approving such a settlement. And that depends wholly on whether the provisions that determine the amount of a SIBs award are "applicable provisions of law" to which a settlement must adhere. If (as the Court contends) they are, then so are the eligibility provisions, and there can be no true settlements at all. But if (as I contend) they are not, then the settlement need not comply with or adhere to them, and it is irrelevant whether the parties split the difference or disputed the underlying facts. The calculation of the amount of SIBs is just as fact-dependent and just as subject to dispute as the determination of the employee's entitlement to SIBs, if not more so. There is no distinction between the two that justifies treating the provisions that determine the amount of a SIBs award as an "applicable provision of law" but not the eligibility provisions.
For these reasons, I cannot agree with the Court's construction of the phrase "applicable provisions of law" to refer to all provisions that govern an award of workers' compensation benefits. Instead, I would construe "applicable provisions" to refer to those that apply to settlements of a claim for such an award. As noted, the Act contains numerous provisions that expressly govern such settlements, including provisions that prohibit settlements that award a lump-sum payment of benefits, TEX. LAB. CODE §§ 408.005(a), 410.256(c)(1); that limit or terminate a right to medical
TEX. LAB. CODE § 408.142(a). The work-search compliance standards require the employee to provide satisfactory evidence to the Division of Workers Compensation of:
Id. § 408.1415(a).
Next, the Court asserts that this construction renders the provisions that require a trial court to ensure that a settlement adheres to all "appropriate" provisions "of little substance" and violates our duty to "give meaning to all" of the Act's provisions because "the Code already imposes specific requirements on settlements which have the force of law." Ante at 616. The obvious flaw in this argument is that the Act also "already imposes specific [substantive] requirements on [awards] which have the force of law," and yet the Court finds the provisions meaningful and of "substance" as to those requirements. In any event, the Court's argument overlooks the fact that the "substance" behind these provisions is to impose a duty on the trial courts to enforce the procedural requirements that apply to settlements. Id. § 410.256 (requiring court approval of settlements).