Rosendo Morales v. Texas Department of Insurance-Division of Workers' Compensation, and Commissioner Ryan Brannan, in His Official Capacity

ACCEPTED

03-14-00808-CV

6830720

THIRD COURT OF APPEALS

AUSTIN, TEXAS

9/8/2015 3:36:21 PM

JEFFREY D. KYLE

CLERK

No. 03-14-00808-CV FILED IN

IN THE 3RD COURT OF APPEALS 3rd COURT OF APPEALS

AUSTIN, TEXAS

AUSTIN, TEXAS 9/8/2015 3:36:21 PM

JEFFREY D. KYLE

Clerk

Rosendo Morales, Appellant

V.

Texas Department of Insurance-Division of Workers’

Compensation and Commissioner Ryan Brannan, in his

official capacity, Appellees

On appeal from the 146th District Court of Bell County, Texas;

Cause No. 269,135-B, the Honorable Jack Weldon Jones Presiding

ROSENDO MORALES APPELLANT’S REPLY BRIEF

BRADLEY DEAN McCLELLAN

State Bar No. 13395980

Richard Pena

Law Offices of Richard Pena, P.C

State Bar No. 00000073

Law Offices of Richard Pena, P.C.

1701 Directors Blvd., Suite 110

Austin, Texas 78744

Brad.McClellan@yahoo.com

(512) 327-6884 telephone

(512) 327-8354 facsimile

Counsel for Appellant

September 8, 2015

Oral Argument Requested

TABLE OF CONTENTS

TABLE OF AUTHORITIES iv-

vi

ISSUES PRESENTED ix

ROSENDO MORALES APPELLANT’S REPLY BRIEF 1

SUMMARY OF ARGUMENT 2

ARGUMENT & AUTHORITIES 6

Issue No. 1: Whether the District Court has jurisdiction to determine a

declaratory judgment action brought to properly construe, interpret, and

enforce applicable Texas statutes against the state agency and the head of

the state agency after administrative remedies have been exhausted and a

live controversy remains with allegations that the state defendants have

violated the statutes in question by failing to properly apply the law? 6

CONCLUSION 13

PRAYER 14

CERTIFICATE OF COMPLIANCE 15

CERTIFICATE OF SERVICE 15

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No. 03-14-00808-CV Rosendo Morales Appellant’s Reply Brief

INDEX OF AUTHORITIES

Cases

City of El Paso v. Heinrich, 284 S.W.3d 366, 372 (Tex. 2009) ............................... 7

City of Ingleside v. City of Corpus Christi, Case No 14-0548, 2015 Tex. LEXIS

685, 58 Tex. Sup. J. 1519 (Tex. July 24, 2015) ........................................................ 3

Patel v. Tex. Dep't of Licensing & Regulation, Case No. 12-0657, ___S.W.3d___,

58 Tex. Sup. J. 1298, 2015 Tex. LEXIS 617, *11-12 (Tex. June 26, 2015)

........................................................................................................................................ passim

SWEPI L.P. v. R.R. Comm 'n, 314 S.W.3d 253, 268 (Tex. App--Austin 2010,

pet. denied) ........................................................................................................................ 10

Tex. Dep’t of Ins. v. Lumbermens Mut. Cas. Co., 212 S.W.3d 870 (Tex. App.—

Austin 2006, pet. denied) ................................................................................................ 5

Tex. Dep’t of State Health Servs. v. Balquinta, 429 S.W.3d 726, 747 (Tex.

App.—Austin 2014, pet. dism’d) ............................................................................... 10

Tex. Workers' Comp. Comm'n v. Garcia, 893 S.W.2d 504, 517-18 (Tex. 1995)

................................................................................................................................................. 11

Statutes

Texas Labor Code § 410.255 ........................................................................................... 13

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No. 03-14-00808-CV Rosendo Morales Appellant’s Reply Brief

ISSUE PRESENTED

Issue No. 1: Whether the District Court has jurisdiction to determine a

declaratory judgment action brought to properly construe, interpret, and

enforce applicable Texas statutes against the state agency and the head of

the state agency after administrative remedies have been exhausted and a

live controversy remains with allegations that the state defendants have

violated the statutes in question by failing to properly apply the law?

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No. 03-14-00808-CV Rosendo Morales Appellant’s Reply Brief

No. 03-14-00808-CV

IN THE 3RD COURT OF APPEALS

AUSTIN, TEXAS

Rosendo Morales, Appellant

V.

Texas Department of Insurance-Division of Workers’

Compensation and Commissioner Ryan Brannan, in his official

capacity, Appellees

On appeal from the 146th District Court of Bell County, Texas;

Cause No. 269,135-B, the Honorable Jack Weldon Jones

Presiding

ROSENDO MORALES APPELLANT’S REPLY BRIEF

To the Honorable Justices of the 3rd Court of Appeals:

Courts are the last check on the administrative agencies and agency

officers not following the laws adopted by the Legislature. An administrative

agency does not get the last word on what the law requires and whether the

agency is properly enforcing, applying, and complying with the law’s

requirements. The Judicial Branch ultimately determines the law and

enforces proper compliance with the laws in the State of Texas and in the

United States of America.

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No. 03-14-00808-CV Rosendo Morales Appellant’s Reply Brief

SUMMARY OF THE ARGUMENT

Subsequent to the initial Appellant’s brief, the Texas Supreme Court in

two very recent decisions in June and July of this year Patel and Ingleside v.

Corpus Christi. The Appellees appear to reassert legal arguments the

Supreme Court rejected in Patel. Patel allowed for declaratory judgment

against a state agency and explained the Heinrich, DeQueen, and Sefzik

opinions allowed for declarations to require compliance with statutes. The

Ingelside v. Corpus Christi case recently determined the interpretation of city

law’s presented a justiciable controversy for a declaratory judgment. In Patel,

the Texas Supreme Court rejected a state agency’s attempt to invoke

immunity, standing, and redundancy (as all three argued in this matter) to

avoid a declaratory judgment action to require compliance with the law by a

state agency and explained suits to require statutory compliance are allowed.

In the Patel decision issued on June 25th, the Texas Supreme Court

stated: “In Heinrich we decided that sovereign immunity does not prohibit

suits brought to require state officials to comply with statutory or

constitutional provisions. 284 S.W.3d at 372.” Patel v. Tex. Dep't of

Licensing & Regulation, Case No. 12-0657, ___S.W.3d___, 58 Tex. Sup. J. 1298,

2015 Tex. LEXIS 617, *11-12 (Tex. June 26, 2015).

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In the City of Ingleside v. City of Corpus Christi, Case No 14-0548, 2015

Tex. LEXIS 685, 58 Tex. Sup. J. 1519 (Tex. July 24, 2015), the Texas Supreme

Court explained: “Interpreting and applying an ordinance is also well within

judicial authority. Cf. City of Fort Worth v. Gulf Ref. Co., 125 Tex. 512, 83 S.W.2d

610, 617 (Tex. 1935) (construing and applying several ordinances regulating

filling station businesses).” Id. at 2015 Tex. LEXIS 685, *8-9. The

interpretation and application of laws are well within judicial authority even

to bind governmental entities.

The state Appellee’s in part assert: “the UDJA does not waive the State’s

immunity for claims seeking an interpretation of, or a declaration of rights

under, a statute” and that Mr. Morales is “requesting sweeping declarations

that go beyond any present or imminent dispute.” Appellee’s Brief p. 6,7. The

Texas Supreme Court in the Patel decision rejected these arguments like

DeQueen did previously, and unquestionably this is a present and imminent

dispute with exhausted administrative remedies (beyond the Patel dispute

level of threatened agency action) over whether a four level cervical neck

fusion is rated a 5% (“a minor impairment” see p. 110 of the AMA Guides

attached as to Appellant’s Brief) or a 27% for major impairment to the

cervical spine from the permanently fused spinal segments.

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No. 03-14-00808-CV Rosendo Morales Appellant’s Reply Brief

The final decision and order of the Texas Department of Insurance-

Division of Workers’ Compensation and the DWC Commissioner Brannan,

collectively the DWC, ignores pre-maximum medical improvement spinal

surgeries—and not just a minor spinal surgery, but a four level cervical neck

fusion. The law does not allow such in assigning permanent impairment

ratings which are determined based upon a worker’s condition at maximum

medical improvement.

The DWC appellants’ argue baldly and erroneously that the UDJA: “At

most, it waives immunity for challenges ‘to the validity’ of a statute.” DWC

Appellee’s Brief at p. 9, citing to Patel. The Texas Supreme Court in Patel

recently again disagreed with this statement by explaining: “In Heinrich we

decided that sovereign immunity does not prohibit suits brought to

require state officials to comply with statutory or constitutional

provisions. 284 S.W.3d at 372.” (Emphasis added.) Patel v. Tex. Dep't of

Licensing & Regulation, Case No. 12-0657, ___S.W.3d___, 58 Tex. Sup. J. 1298,

2015 Tex. LEXIS 617, *11-12 (Tex. June 26, 2015). The Court made clear

statutory compliance or constitutional compliance are proper waivers of

sovereign immunity without addressing where the state agency actually joins

a lawsuit and seeks legal interpretations such as here.

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No. 03-14-00808-CV Rosendo Morales Appellant’s Reply Brief

Again, Appellant is not seeking liability damages from the state

Defendants. Appellant is seeking to enforce the statutory rights violated by

the Appellees and failed to be enforced and properly followed by the

Appellees.

This Court previously allowed a declaratory judgment action against

the DWC in Tex. Dep’t of Ins. v. Lumbermens Mut. Cas. Co., 212 S.W.3d 870 (Tex.

App.—Austin 2006, pet. denied), which resulted in erroneous applications of

the law from dicta which the DWC and TMIC have not allowed impairment

ratings to consider spinal surgeries even occurring before maximum medical

improvement. Workers who undergo insurance carrier approved and paid for

major spinal fusion surgeries occurring before the worker’s recovery

stabilizes at maximum medical improvement must have such surgeries and

the effects of such surgeries considered and rated when impairment ratings

are assigned under the Texas Workers’ Compensation Act, and the DWC and

the DWC Commissioner must follow the law.

The Judicial Branch of Texas is still the proper and last avenue to seek

compliance with adopted state laws.

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No. 03-14-00808-CV Rosendo Morales Appellant’s Reply Brief

REPLY ARGUMENT & AUTHORITY

Issue No. 1: Whether the District Court has jurisdiction to determine a

declaratory judgment action brought to properly construe, interpret,

and enforce applicable Texas statutes against the state agency and the

head of the state agency after administrative remedies have been

exhausted and a live controversy remains with allegations that the state

defendants have violated the statutes in question by failing to properly

apply the law?

The DWC and the Commissioner appear to allege declaratory relief is not

available at all against the DWC and the Commissioner except for The DWC

argues (Appellees’ Brief p. 9):

Morales pursued declaratory relief “to properly construe, interpret, and

enforce applicable Texas statutes against the state agency and the head of

the state agency.” Br. of Appellant ix (Issue Presented); see also, e.g., id. at

3 (“This case involves a proper request for declaratory judgment with a

challenge to the DWC Defendants [sic] improper enforcement of the

law.”). The UDJA does not waive immunity for these claims. At most, it

waives immunity for challenges to “the validity of” a statute.

The Texas Supreme Court in Patel rejected this similar argument of another

state agency and emphasized statutory compliance is a proper use of

declaratory judgment actions.

1. The Patel Decision Rejected State’s Arguments of Immunity,

Redundancy, Ripeness and Standing.

Courts should wonder what so concerns the state over the proper

enforcement of statutory terms, and why the state agency and state official

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No. 03-14-00808-CV Rosendo Morales Appellant’s Reply Brief

want to avoid proper statutory application, interpretation and enforcement.

The Texas Supreme Court just a couple of months ago in Patel v. Tex. Dep't of

Licensing & Regulation, Case No. 12-0657, ___S.W.3d___, 58 Tex. Sup. J. 1298,

2015 Tex. LEXIS 617, *11-12 (Tex. June 26, 2015) rejected analogous

arguments from a state agency attempting to claim four basic obstacles also

asserted in this matter as to why the plea to the jurisdiction of a state agency

should be granted: immunity, redundancy, ripeness and standing. In Patel, the

Court emphasized:

In Heinrich we decided that sovereign immunity does not prohibit

suits brought to require state officials to comply with statutory or

constitutional provisions.

Patel v. Tex. Dep't of Licensing & Regulation, 2015 Tex. LEXIS 617, *10, 58 Tex.

Sup. J. 1298 (Tex. 2015).

The Texas Supreme Court explained the rationale that from Heinrich

that “it is clear that suits to require state officials to comply with

statutory or constitutional provisions are not prohibited by sovereign

immunity.” City of El Paso v. Heinrich, 284 S.W.3d 366, 372 (Tex. 2009). This

matter involves a statutory challenge in part that the state agency and state

officials have failed to comply with statutory provisions and the ultra vires

allegations that the final decision and order is in violation of the statutory

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No. 03-14-00808-CV Rosendo Morales Appellant’s Reply Brief

provisions of the Labor Code, and If there is any doubt, then Appellant should

be allowed to plead more specifically the allegations.

2. State Agency Immunity is Waived When Statutes are Challenged as

Not Being Properly Applied and Enforced as Again Explained by the

Texas Supreme Court in Patel.

The Texas Supreme Court, in rejecting a state agency’s arguments for

sovereign immunity in a jurisdictional plea, made clear this in Patel:

. . . in Heinrich we clarified that "[f]or claims challenging the validity of . .

. statutes . . . the Declaratory Judgment Act requires that the relevant

governmental entities be made parties, and thereby waives immunity."

Id. (citing Tex. Educ. Agency v. Leeper, 893 S.W.2d 432, 446 (Tex. 1994)).

And we have reiterated the principle more recently. See Tex. Dep't of

Transp. v. Sefzik, 355 S.W.3d 618, 621-22 & n.3 (Tex. 2011) (restating

that state entities can be—and in some instances such as when the

constitutionality of a statute is at issue, must be—parties to challenges

under the UDJA); Tex. Lottery Comm'n v. First State Bank of DeQueen,

325 S.W.3d 628, 634 (Tex. 2010) (holding that allegations against the

lottery commissioner were not ultra vires allegations because the claim

challenged a statute and was not one involving a government officer's

action or inaction).

Patel v. Tex. Dep't of Licensing & Regulation, 2015 Tex. LEXIS 617, *11-12 (Tex.

June 26, 2015). The Texas Supreme Court allowed declaratory judgment to

proceed and required the relevant governmental entities be made parties, and

Mr. Morales has plead both ultra vires claims and claims challenging the

proper application and enforcement of statutory terms.

In DeQueen subsequent to Heinrich, the Texas Supreme Court reiterated

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No. 03-14-00808-CV Rosendo Morales Appellant’s Reply Brief

that Declaratory Judgment Act suits to construe statutes are expressly allowed

jurisdictionally against a state agency. Texas Lottery Commission v. First State

Bank of DeQueen, 325 S.W.3d 628 (Tex. 2010). The Supreme Court in DeQueen

reiterated that jurisdiction over the state agency existed and citing to Leeper

explained:

[T]he DJA permits statutory challenges and governmental entities

may be bound by those challenges, the DJA contemplates entities

must be joined in those suits. Leeper, 893 S.W.2d at 446.

The Texas Supreme Court further explained in DeQueen that statutory

clarification, as expressly sought in this matter, that the state agency is a

proper party DeQueen, 325 S.W.3d 628 at 635 [emphasis added]:

Next, the Commission asserts that the DJA does not waive immunity

because it applies only to suits involving constitutional invalidation and

not to those involving statutory interpretation. But the language in the

DJA does not make that distinction. . . . The trial court properly

exercised jurisdiction over this claim.

Further, this matter involves partially a final decision of the DWC and the

DWC Commissioner, so this matter does not just involve challenging the

agency’s interpretation of the statutes but also the actions of the agency head

by failing to properly apply and enforce the statutes.

3. Declaratory Remedies To Prevent Future Abuses Are Not Redundant.

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No. 03-14-00808-CV Rosendo Morales Appellant’s Reply Brief

The DWC Appellees argue redundancy citing to rely upon inapplicable

cases in SWEPI L.P. v. R.R. Comm 'n, 314 S.W.3d 253, 268 (Tex. App--Austin

2010, pet. denied); Tex. Dep’t of State Health Servs. v. Balquinta, 429 S.W.3d

726, 747 (Tex. App.—Austin 2014, pet. dism’d). Appellees’ Brief p. 21, 22.

However, in all those cases the state agency was a party and would have been

legally bound by the determinations.

The Texas Supreme Court in Patel also rejected the redundancy

argument because the mere judicial review of an agency order would be

limited to that particular order and not declarations of rights and protection

against future attempts to misapply the law under the statutes:

The available remedies on appeal from an administrative finding

are limited to reversal of the particular orders at issue. Id. But the

Threaders seek more than a reversal of the citations issued to Momin

and Yogi. They seek prospective injunctive relief against future agency

orders based on the statutes and regulations. Accordingly, because the

declaration sought goes beyond reversal of an agency order,

Section 2001.174 of the APA does not provide a redundant remedy.

(Emphasis added.) Patel v. Tex. Dep't of Licensing & Regulation, 2015 Tex.

LEXIS 617, *18-19 (Tex. June 26, 2015).

The declaratory relief in this matter goes well beyond the reversal of an

individual order, but seeks to require the Defendants including the Appellees

to all properly apply and enforce the statutes in the future. Plaintiff has plead

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No. 03-14-00808-CV Rosendo Morales Appellant’s Reply Brief

declaratory relief beyond just the reversal of the DWC and the DWC

Commissioner’s final decision and order:1

The DWC Defendants and Texas Mutual may not ignore and must

consider invalid an impairment rating that does not follow the Texas

Workers’ Compensation Act which requires pre-MMI surgeries and the

effects of the surgery to be considered in assigning an impairment. This

Court should so declare and enforce.

Mr. Morales clearly seeks to ensure that the DWC and the Commissioner and

the Insurance Carrier properly interpret and properly apply the laws in the

future and make sure the erroneous application and violation of the statutes

does not occur in the future.

4. Ripeness and Standing Exists with a Live Controversy. Patel explains

Ripeness is Shown by Mere Initial State Action—Here an Erroneous

Final State Decision & Order Exists

In Patel, the Texas Supreme Court rejected the state agency’s analogous

arguments as to standing and ripeness:

The standing doctrine identifies suits appropriate for judicial

resolution. Brown v. Todd, 53 S.W.3d 297, 305 (Tex. 2001). Standing

assures there is a real controversy between the parties that will be

determined by the judicial declaration sought. Id. (quoting Tex. Workers'

Comp. Comm'n v. Garcia, 893 S.W.2d 504, 517-18 (Tex. 1995)). "[T]o

challenge a statute, a plaintiff must [both] suffer some actual or

threatened restriction under the statute" and "contend that the statute

1

CR 51, Plaintiff’s Amended Petition and Suit for Declaratory Relief, Par. 13

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No. 03-14-00808-CV Rosendo Morales Appellant’s Reply Brief

unconstitutionally restricts the plaintiff's rights." Garcia, 893 S.W.2d at

518.

Patel at 2015 Tex. LEXIS 617, *14, 58 Tex. Sup. J. 1298.

The substantive statutory issues are clear and laws are being ignored or

erroneously applied and not enforced. Without question a live controversy

exists over the inclusion and consideration of spinal fusion surgeries in

impairments and impairment ratings under the Texas Workers’

Compensation Act.

5. Under Labor Code Section 410.255, the DWC is a proper party for all

other issues, which likely includes the Proper Enforcement of the Law

for Assigning Impairment Ratings.

The state appellees argue that § 410.255 does not matter at p. 15 of their

brief:

. . . . the Legislature provided the Division with authority to intervene

where it believed there was a possible violation of applicable laws and

rules. See id. § 410.254. That authority would be largely superfluous if

the Division could be dragged into court regardless of its wishes.

That is the whole problem with the DWC’s circular argument that only the

DWC gets to decide “if there was a possible violation of applicable laws.” This

would conveniently avoid the purpose of the Judicial Branch in Texas to

ensure a state agency and state officials follow the law. The DWC is a proper

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No. 03-14-00808-CV Rosendo Morales Appellant’s Reply Brief

party under Texas Labor Code § 410.255 as the Legislature envisioned.

CONCLUSION

This Court should follow the Patel and Lumbermens decision allow

Rosendo Morales to proceed with the declaratory judgment claim and keep as

parties both the DWC and the Commissioner, in his official capacity. The

jurisdiction exists due to the live controversy, exhaustion of administrative

remedies, and the state agency and state official are necessary parties for

proper enforceability of the statutes and to ensure proper compliance with

statutory terms alleged to be violated. Otherwise only the few who continue

to fight will have a chance for justice on a piece by piece basis and the harm

may occur again and again. The purpose of the Declaratory Judgment Act is to

make the laws clear to all affected and to make sure the laws are properly

applied and not violated by the state agency and the head of the state agency.

The Judiciary oversees the Executive Branch both to uphold its proper actions

but to also to protect Texans’ rights to make sure the laws are properly

applied and correctly interpreted and rightly enforced.

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No. 03-14-00808-CV Rosendo Morales Appellant’s Reply Brief

PRAYER

Rosendo Morales, Appellant, respectfully prays and ask that this Court

reverse the ruling of the District Court on the plea to the jurisdiction granted

to the DWC and the Commissioner, and this Court should not allow the

dismissal of the DWC and the Commissioner, and that this Court determine

that the District Court has jurisdiction to determine the declaratory judgment

matters sought by Appellant including against the DWC and the

Commissioner. Appellant ask for all other relief to which he is entitled

including costs of court.

Respectfully,

/s/ Brad McClellan

Bradley Dean McClellan

State Bar No. 13395980

Of Counsel, Law Offices of Richard Pena, P.C.

Richard Pena

Law Offices of Richard Pena, P.C

State Bar No. 00000073

1701 Directors Blvd., Suite 110

Austin, Texas 78744

Brad.McClellan@yahoo.com

(512) 327-6884 telephone

(512) 327-8354 facsimile

Attorney for Appellant

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No. 03-14-00808-CV Rosendo Morales Appellant’s Reply Brief

CERTIFICATE OF COMPLIANCE

I certify that I have 3,325 word count checked by the word program in

compliance with the Texas Rules of Appellate Procedure.

/s/ Brad McClellan

Bradley Dean McClellan

CERTIFICATE OF SERVICE

I certify that a copy of the foregoing Appellants’ Reply Brief was served

on the through counsel of record by the method indicated below on

September 8, 2015.

Adrienne Butcher, Assistant Attorney General Via efiling/eservice

Administrative Law Division

Office of the Attorney General of Texas

P.O. Box 12548 (MC-018), Capital Station

Austin, Texas 78711-2548

512-475-4208

Facsimile: (512) 320-0167

adrienne.butcher@texasattorneygeneral.gov

Attorneys for DWC and Commissioner

Courtesy copy provided to other Defendant Via efiling/eservice

below

Scott Placek & Matthew Foerster

Arnold & Placek, LLC

203 East Main Ave, Ste. 203

Round Rock, TX 78664

Attorneys for Defendant

/s/ Brad McClellan

Bradley Dean McClellan

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