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Zenith Insurance Co. v. Ayala

In this workers' compensation case, the court of appeals concluded that the carrier waived its right to dispute the extent of the claimant's compensable injury by failing to adhere to Texas Labor Code �409.021(c)'s 60-day deadline. The 60-day period for challenging compensability does not apply to a dispute over extent of injury. Texas Supreme Court, No. 09-0292, 06-14-201

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In this workers’ compensation case, the court of appeals concluded that the carrier waived its right to dispute the extent of the claimant’s compensable injury by failing to adhere to Texas Labor Code section 409.021(c)’s sixty-day deadline. __ S.W.3d __. We recently held that the sixty-day period for challenging compensability does not apply to a dispute over extent of injury. State Office of Risk Mgmt. v. Lawton, 295 S.W.3d 646, 649-50 (Tex. 2009). In light of Lawton, we reverse the court of appeals’ judgment and remand this case to the trial court for further proceedings.

On January 23, 2006, Carmen Ayala injured her lower back when a window fell on her at work. Ayala was originally diagnosed with a back sprain/strain. On March 1, Zenith received notice of Ayala’s injury and commenced paying benefits. On April 13, Ayala’s original diagnosis was revised to include lumbar radicular syndrome. A week later, her diagnosis was again amended to also include lumbar spondylolisthesis.*fn1 To treat Ayala, physicians recommended an epidural steroid injection, a procedure requiring Zenith’s preauthorization. On April 27, Zenith preauthorized the treatment, and the injection was performed. On July 28, Zenith notified Ayala that it was disputing her entitlement to benefits for the lumbar condition because the condition was degenerative and not the result of the January 23 injury.

The Texas Department of Insurance, Division of Workers’ Compensation (the Division), held a contested case hearing to determine whether Ayala’s compensable injury included the lumbar condition and whether Zenith had waived its right to contest compensability by not complying with Labor Code section 409.021(c)’s deadline. The parties stipulated that: (1) Ayala sustained a compensable injury; (2) Zenith received notice of Ayala’s injury on March 1; (3) Zenith was not contesting compensability; and (4) Zenith did not dispute that the compensable injury included the lumbar condition until July 28. The hearing officer concluded that, although Ayala failed to prove the compensable injury event was a producing cause of the lumbar condition, it was nevertheless compensable because Zenith failed to dispute compensability within sixty days after it received notice of Ayala’s initial injury. The Division appeals panel affirmed, and Zenith sought judicial review.

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