Texas Supreme Court overrules decision holding 7 days to contest compensability

If the carrier fails to either begin payment of benefits or notify the Workers' Compensation Commission and the employee of its refusal to pay within seven days, the carrier may incur an administrative penalty, but not a complete waiver of its right to contest compensability.

Case name: Southwestern Bell Telephone Co. v. Mitchell, No. 05-0171 (Tex. 12/19/08).

Ruling: The Texas Supreme Court reversed the Court of Appeals' finding that the carrier waived its right to contest compensability because it was not contested within seven days.

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What it means: Under Texas law, a carrier has 60 days to contest the compensability of a claim. Failure to meet that deadline will result in a waiver of the carrier's right to contest compensability. However, if the carrier fails to either begin payment of benefits or notify the Workers' Compensation Commission and the employee of its refusal to pay within seven days, the carrier may incur an administrative penalty, but not a complete waiver of its right to contest compensability.

Summary: The claimant brought an action for workers' compensation death benefits against the employer, asserting that while working there, the claimant's wife contracted Legionnaire's disease and died. The carrier contested compensability 43 days after receiving the notice of injury.

The Texas Supreme Court reasoned that the carrier's contest was timely under a workers' compensation provision providing that a carrier has 60 days to contest compensability of the injury.

The Court of Appeals had issued an opinion based on another provision of Texas workers' compensation law. The Court of Appeals interpreted the provision to indicate the carrier waived its ability to contest compensability if it failed to meet a seven-day deadline. That provision merely provided that the carrier "shall initiate compensation ... promptly." The Supreme Court pointed out that the commission had always read that provision to permit an administrative penalty if the carrier did not respond promptly but did not mean that the carrier lost the ability to contest the compensability of the claim. Thus, the Supreme Court ruled the carrier's contest was timely.

February 23, 2009

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