SWBT v. Mitchell, No. 05-0171 (Tex. Dec. 19, 2008)(Hecht)(workers comp, deadline for carrier to
contest compensability of employee's injury)
In Continental Casualty Co. v. Downs, we construed section 409.021(a) of the
Workers’ Compensation Act[1] to preclude a carrier from contesting the
compensability of an employee’s injury unless, within seven days of receiving notice
of injury, it either began to pay benefits or gave written notice of its refusal to do so.
[2] For more than a decade, the Texas Workers’ Compensation Commission, the
entity then charged with carrying out the Act,[3] had consistently taken the position
that a carrier had sixty days to contest compensability.[4] Less than nine months after
Downs was final, the Legislature amended section 409.021 to make clearer that a
carrier who “fails to comply with Subsection (a) does not waive the . . . right to contest
the compensability of the injury”.[5]
Because the rule announced in Downs was in effect for only about a year, petitioner
contends we should overrule that case as having been wrongly decided. We agree.
We reverse the judgment of the court of appeals[6] and remand the case to the trial
court for further proceedings.
SOUTHWESTERN BELL TELEPHONE COMPANY, L.P., D/B/A SBC TEXAS v. WILLIAM C. MITCHELL,
BENEFICIARY OF LOUISE MITCHELL, DECEDENT; from Bexar County; 4th district (04-04-00466-CV, ___
SW3d ___, 01-26-05)
The Court reverses the court of appeals' judgment and remands the case to the trial court.
Justice Hecht delivered the opinion of the Court, in which Justice Wainwright, Justice Brister, Justice
Johnson, and Justice Willett joined.
Chief Justice Jefferson delivered a dissenting opinion, in which Justice O'Neill and Justice Medina joined.
(Justice Green not sitting)
════════════════════════════════════════════════════════════════════
SW Bell Telephone v. Mitchell Telephone Co. (Tex. 2008)
════════════════════════════════════════════════════════════════════
Argued March 23, 2006
Justice Hecht delivered the opinion of the Court, in which Justice Wainwright, Justice Brister, Justice
Johnson, and Justice Willett joined.
Chief Justice Jefferson filed a dissenting opinion, in which Justice O’Neill and Justice Medina joined.
Justice Green took no part in the decision of the case.
In Continental Casualty Co. v. Downs, we construed section 409.021(a) of the Workers’ Compensation Act
[1] to preclude a carrier from contesting the compensability of an employee’s injury unless, within seven
days of receiving notice of injury, it either began to pay benefits or gave written notice of its refusal to do so.
[2] For more than a decade, the Texas Workers’ Compensation Commission, the entity then charged with
carrying out the Act,[3] had consistently taken the position that a carrier had sixty days to contest
compensability.[4] Less than nine months after Downs was final, the Legislature amended section 409.021
to make clearer that a carrier who “fails to comply with Subsection (a) does not waive the . . . right to contest
the compensability of the injury”.[5]
Because the rule announced in Downs was in effect for only about a year, petitioner contends we should
overrule that case as having been wrongly decided. We agree. We reverse the judgment of the court of
appeals[6] and remand the case to the trial court for further proceedings.
I
On August 14, 2000, Louise Mitchell, a clerk-typist for petitioner Southwestern Bell Telephone Company,
was diagnosed with Legionnaire’s disease. Claiming to have contracted the disease at work, Mitchell sent
Bell a notice of injury, which Bell received on August 23. Mitchell died four days later, and her husband,
respondent William Mitchell, claimed workers’ compensation death benefits. On October 5, 43 days after
receiving notice of injury, Bell, a self-insured nonsubscriber, contested compensability in a filing with the
Commission.
At the time, section 409.021(a) of the Texas Labor Code stated:
An insurance carrier shall initiate compensation . . . promptly. Not later than the seventh day after the date
on which an insurance carrier receives written notice of an injury, the insurance carrier shall:
(1) begin the payment of benefits as required by this subtitle; or
(2) notify the commission and the employee in writing of its refusal to pay and advise the employee of:
(A) the right to request a benefit review conference; and
(B) the means to obtain additional information from the commission.[7]
Earlier in the year, on January 26, the court of appeals had issued its opinion in Downs holding that a carrier
who failed to meet this seven-day deadline could not contest compensability. The Commission had always
taken the position that failing to meet the deadline resulted only in a possible administrative penalty,[8] not
in a loss of the right to contest compensability.[9] The Commission believed a carrier had sixty days to
contest compensability, based on section 409.021(c), which stated:
(c) If an insurance carrier does not contest the compensability of an injury on or before the 60th day
after the date on which the insurance carrier is notified of the injury, the insurance carrier waives its right to
contest compensability. The initiation of payments by an insurance carrier does not affect the right of the
insurance carrier to continue to investigate or deny the compensability of an injury during the 60-day period.
[10]
After the court of appeals’ Downs decision, the Commission adhered to its position, adopting rules in March
that reflected its construction of the statute.[11] On August 16, the court granted rehearing and issued a
substitute opinion reaching the same result,[12] and twelve days later the Commission’s executive director
issued the following advisory:
After consultation with the Office of the Attorney General . . . , the Commission understands that the August
16th decision in the Downs case should not be considered as precedent at least until it becomes final upon
completion of the judicial process. In addition, the related Commission’s rules, such as those found at 28
TEX. ADMIN. CODE §§ 124.2, 124.3, and 132.17, remain in effect.[13]
For the Mitchell claim, Downs’s new seven-day deadline fell two weeks after the court of appeals’ final
opinion and two days after the Commission’s advisory against compliance. Bell did not meet that deadline
but did file its contest of compensability within sixty days, as the Commission required. For more than two
years, the administrative proceeding languished while Downs was appealed to this Court. We affirmed the
court of appeals on June 6, 2002, but pending rehearing, the Commission remained adamant in its position.
On June 17, it issued an advisory stating that “the 7 day ‘pay or dispute’ provision in the Downs case is not
final pending the motion for rehearing.”[14] On July 31, a Commission appeals panel followed the
Commission’s construction of the statute, holding that a carrier did not waive the right to contest
compensability as long as it did so within sixty days of receiving notice of injury.[15] We overruled the motion
for rehearing in Downs on August 30 and issued the mandate September 9. On September 12, the
Commission issued an advisory acknowledging that Downs was final and stating that “[a]ll previous
Advisories issued by the Commission regarding this issue are superseded by this Advisory and the Supreme
Court decision.”[16]
The Mitchell proceeding then resumed. A contested case hearing was held in March 2003, the focus of
which was, according to the hearing officer, “where the bacteria [legionella pneumophilia] was contracted,
that is, at work, or somewhere else.” Based on medical evidence that “the bacteria is everywhere in the
environment and because no other co-workers, including those at high risk, contracted the disease”, the
hearing officer concluded that Mitchell’s husband had failed to prove that Mitchell contracted her illness in
the course and scope of employment, finding instead that “[t]he legionnaire’s disease that caused her death
was an ordinary disease of life.” However, the hearing officer also rejected Bell’s argument that Downs
should not be applied retroactively and concluded that by failing to pay benefits or give notice of its refusal
to do so within seven days of notice of Mitchell’s injury, Bell was precluded from contesting compensability.
Consequently, the hearing officer awarded death benefits to Mitchell’s husband. Bell filed an administrative
appeal.
On May 28, 2003, about nine months after Downs was final, the Legislature amended section 409.021 to
make clearer that the rule the Commission had long applied was the rule that the Legislature believed
should be followed. The amendment added the following paragraph (a-1):
An insurance carrier that fails to comply with Subsection (a) does not waive the carrier’s right to contest the
compensability of the injury as provided by Subsection (c) but commits an administrative violation subject to
Subsection (e).[17]
On May 29, the day after the amendments to section 409.021 passed, the Commission appeals panel
affirmed the hearing officer’s decision, holding that Downs should apply retroactively to injuries occurring
before the Court’s decision was final. Bell sought review in the district court, which, though of the view that
this Court “may . . . very well [have] been wrong in Downs”, granted summary judgment for Mitchell’s
husband. The court of appeals affirmed.[18]
We granted Bell’s petition for review.[19]
II
Bell, supported by several amici curiae,[20] argues that we should overrule Downs. We agree.
“Generally, the doctrine of stare decisis dictates that once the Supreme Court announces a proposition of
law, the decision is considered binding precedent”,[21] but we have long recognized that the doctrine is not
absolute. “[W]e adhere to our precedents for reasons of efficiency, fairness, and legitimacy”,[22] and “when
adherence to a judicially-created rule of law no longer furthers these interests, and ‘the general interest will
suffer less by such departure, than from a strict adherence,’ we should not hesitate to depart from a prior
holding.”[23] “[U]pon no sound principle do we feel at liberty to perpetuate an error, into which either our
predecessors or ourselves may have unadvisedly fallen, merely upon the ground of such erroneous
decision having been previously rendered.”[24]
We have observed that “in the area of statutory construction, the doctrine of stare decisis has its greatest
force”[25] because the Legislature can rectify a court’s mistake, and if the Legislature does not do so, there
is little reason for the court to reconsider whether its decision was correct. But when the Legislature does
not acquiesce in the court’s construction, when instead it immediately makes clear that the proper
construction is one long adopted by the agency charged with enforcing the statute, judicial adherence to the
decision in the name of stare decisis may actually disserve the interests of “efficiency, fairness, and
legitimacy” that support the doctrine. It is hardly fair or efficient to give effect to a judicial construction of a
statute for a brief period of time when the Legislature has reinstated for future cases the same rule that had
been followed before the court’s decision. The doctrine of stare decisis does not justify inequity and
confusion in such a narrow gap of time.
That is precisely the situation here. In Downs, we construed section 409.021(a) of the Workers’
Compensation Act to provide that a carrier that did not pay or dispute a claim by paragraph (a)’s seven-day
deadline could not contest compensability.[26] We issued our opinion on June 6, 2002, denied rehearing on
August 30, and issued our mandate on September 9. The Legislature convened in regular session on
January 14, 2003. House Bill 2199 was filed on March 11. After minor changes in committee, the bill added
the following paragraph (a-1) to section 409.021, stating:
An insurance carrier that fails to comply with Subsection (a) does not waive the carrier’s right to contest the
compensability of the injury as provided by Subsection (c) but commits an administrative violation subject to
Subsection (e).[27]
The effect of the amendment was to restore the rule the Texas Workers’ Compensation Commission had
applied for a decade.
Thus, Downs is simply an anomaly in the law. Prior cases unaffected by Downs, and cases controlled by
House Bill 2199, are all treated alike. The rule for them is the same. Were we to adhere to Downs, a
different rule would apply only in those cases caught in the Downs gap. Stare decisis does not warrant an
obstinate insistence on precedent that appears to be plainly incorrect.
We believe, as the dissent does, that finality is an important consideration in statutory construction, and that
an appellate court’s decisions should not change merely because the judges have changed. But while we
think Downs was wrongly decided, as does the author of the dissent, even if our view of Downs were
different, we could not insist that it disrupt the orderly application of the law in a few cases before the
Legislature’s amendment to the statute. No interest in stare decisis supports the application of different rules
in these circumstances. Contrary to the dissent, we opt for stability in the law–a rule that has been followed
for years and is, by legislative action, to continue to be followed in the future. The error in Downs can easily
be remedied without violating the principles of stare decisis. The case is overruled.
* * * * *
Accordingly, we reverse the judgment of the court of appeals and remand the case to the trial court for
further proceedings.
________________________________
Nathan L. Hecht
Justice
Opinion delivered: December 19, 2008
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[1] Act of December 12, 1989, 71st Leg., 2d C.S., ch. 1, § 5.21, 1989 Tex. Gen. Laws 1, 51 (effective Jan. 1,
1991) (formerly Tex. Rev. Civ. Stat. Ann. art. 8308-5.21), codified by Act of May 12, 1993, 73d Leg., R.S.,
ch. 269, § 1, 1993 Tex. Gen. Laws 987, 1195-1196, as Tex. Labor Code §§ 409.021-.022.
[2] 81 S.W.3d 803, 804, 807 (Tex. 2002).
[3] The Commission was created in 1989 to replace the Industrial Accident Board, and was abolished
effective September 1, 2005, with its functions transferred to a new division of the Texas Department of
Insurance. Act of December 12, 1989, 71st Leg., 2d C.S., ch. 1, §§ 2.01-.09, 17.01, 1989 Tex. Gen. Laws at
7, 115 (see former Tex. Rev. Civ. Stat. Ann. art. 8308-2.01 et seq., codified in 1993 as Chapter 402 of the
Texas Labor Code); Act of May 29, 2005, 79th Leg., R.S., ch. 265, §§ 1.003, 8.001, 2005 Tex. Gen. Laws
469, 470, 607-608.
[4] Downs, 81 S.W.3d at 809 (Jefferson, J., dissenting) (citing cases).
[5] Act of May 28, 2003, 78th Leg., R.S., ch. 1100, § 1, 2003 Tex. Gen. Laws 3161, 3162 [H.B. 2199].
[6] ___ S.W.3d ___ (Tex. App.—San Antonio 2005) (mem. op.).
[7] Act of May 12, 1993, 73d Leg., R.S., ch. 269, § 1, 1993 Tex. Gen. Laws 987, 1195, codifying Act of
December 12, 1989, 71st Leg., 2d C.S., ch. 1, § 5.21 (a) (in part), (b), 1989 Tex. Gen. Laws 1, 51 (effective
Jan. 1, 1991) (formerly Tex. Rev. Civ. Stat. Ann. art. 8308-5.21).
[8] Tex. Labor Code § 409.021(e) (“An insurance carrier commits a violation if the insurance carrier does
not initiate payments or file a notice of refusal as required by this section. A violation under this subsection
is a Class B administrative violation. Each day of noncompliance constitutes a separate violation.”), Act of
May 12, 1993, 73d Leg., R.S., ch. 269, § 1, 1993 Tex. Gen. Laws 987, 1196, codifying, as rewritten, Act of
December 12, 1989, 71st Leg., 2d C.S., ch. 1, § 5.21(a) (in part), (b), 1989 Tex. Gen. Laws 1, 51 (effective
Jan. 1, 1991) (formerly Tex. Rev. Civ. Stat. Ann. art. 8308-5.21 (a) - (b)) .
[9] See Tex. Workers’ Comp. Comm’n, Appeal No. 960949, 1996 WL 367060, at *6 (June 28, 1996); Tex.
Workers’ Comp. Comm’n, Appeal No. 950944, 1995 WL 481670, at *5 (July 24, 1995); Tex. Workers’ Comp.
Comm’n, Appeal No. 92532, 1992 WL 373451, at *4 (Nov. 13, 1992); Tex. Workers’ Comp. Comm’n, Appeal
No. 92122, 1992 WL 358230, at *6 (May 4, 1992).
[10] Tex. Labor Code § 409.021(c).
[11] 25 Tex. Reg. 2101 (Mar. 10, 2000) (adopting new Rule 124.3, 28 Tex. Admin. Code § 124.3 (2000)); id.
at 2106-2114 (Mar. 10, 2000) (adopting new Rule 132.17, 28 Tex. Admin. Code § 132.17 (2000)).
[12] Downs v. Continental Cas. Co., 32 S.W.3d 260 (Tex. App.— San Antonio 2000), aff’d, 81 S.W.3d 803
(Tex. 2002).
[13] Tex. Workers’ Comp. Advisory 2000-07 (Aug. 28, 2000),
http://www.tdi.state.tx.us/wc/news/advisories/ad2000-07.html.
[14] Tex. Workers’ Comp. Advisory 2002-08 (June 17, 2002),
http://www.tdi.state.tx.us/wc/news/advisories/ad2002-08.html.
[15] Tex. Workers’ Comp. Comm’n, Appeal No. 021635, 2002 WL 1981340, at *2-3 (July 31, 2002),
http://www.tdi.state.tx.us/appeals/2002cases/021635r.pdf.
[16] Tex. Workers’ Comp. Advisory 2002-15 (Sept. 12, 2002),
http://www.tdi.state.tx.us/wc/news/advisories/ad2002-15.html.
[17] Act of May 28, 2003, 78th Leg., R.S., ch. 1100, § 1, 2003 Tex. Gen. Laws 3161, 3162.
[18] ___ S.W.3d ___, ___ (Tex. App.—San Antonio 2005) (mem. op.).
[19] 49 Tex. S. Ct. J. 360 (Feb. 24, 2006).
[20] Texas Municipal League – Intergovernment Risk Pool, Texas Association of Business, Texas
Association of School Boards, Insurance Council of Texas, Texas Mutual Insurance Co., and Edwards Risk
Management, Inc.
[21] Lubbock County v. Trammel’s Lubbock Bail Bonds, 80 S.W.3d 580, 585 (Tex. 2002).
[22] Weiner v. Wasson, 900 S.W.2d 316, 320 (Tex. 1995).
[23] Lehmann v. Har-Con Corp., 39 S.W.3d 191, 215 (Tex. 2001) (Baker, J., concurring) (quoting Benavides
v. Garcia, 290 S.W. 739, 740 (Tex. Comm’n App. 1927, judgm’t adopted).
[24] Willis v. Owen, 43 Tex. 41, 48-49 (1875).
[25] Marmon v. Mustang Aviation, Inc., 430 S.W.2d 182, 186 (Tex. 1968) (citing Moss v. Gibbs, 370 S.W.2d
452, 458 (Tex. 1963), and United States v. South Buffalo Ry., 333 U.S. 771, 774-775 (1948)).
[26] Downs v. Continental Cas. Co., 81 S.W.3d 803, 804, 807 (Tex. 2002).
[27] Tex. H.B. 2199, 78th Leg., R.S. (2003) (committee substitute); Tex. Lab. Code § 409.021(a-1).