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Affirmed as Modified and Opinion filed August 26, 2008.
Fourteenth Court of Appeals
TEXAS MUTUAL INSURANCE COMPANY, Appellant/Cross-Appellee
P. LANCE MORRIS, Appellee/Cross-Appellant
On Appeal from the 11th District Court
Harris County, Texas
Trial Court Cause No. 2004-53230
O P I N I O N
Texas Mutual Insurance Company (ATMI@) appeals from a final judgment in favor of P. Lance Morris following a jury trial. In six issues, TMI contends that (1) the evidence is legally insufficient to sustain the jury=s finding that it engaged in unfair and deceptive acts or practices in violation of the Texas Insurance Code, (2) the evidence is legally insufficient to sustain the jury=s finding that TMI did so knowingly, (3) the evidence is legally insufficient to support the award of $75,000 in damages for loss of credit reputation, (4) the evidence is legally insufficient to support the award of $50,000 for mental anguish, (5) the trial court erred in submitting broad-form liability questions containing both valid and invalid theories of liability, and (6) the judgment cannot be sustained on the alternative claim of breach of the duty of good faith and fair dealing because no such cause of action exists in the context of a worker=s compensation claim. In a cross-appeal, Morris requests that this court modify the trial court=s judgment to increase the award of additional damages for TMI=s knowing violation of the Insurance Code from $250,000 to $375,000.
We conclude that the evidence is legally sufficient to support the jury=s finding that TMI engaged in unfair and deceptive acts or practices in violation of the Texas Insurance Code and sufficient evidence to support the jury=s finding that TMI did so knowingly; that legally sufficient evidence supports the award of mental anguish, and that no Casteel problem exists in the charge to require reversal. However, we find no evidence supports the award for loss of credit reputation. We also conclude that the trial court acted appropriately in reducing the additional damages for the knowing violation from $375,000 to $250,000 and affirm that award. Finally, we are bound to follow the Texas Supreme Court=s opinion in Aranda v. Insurance Co. of North America, which does apply to workers= compensation cases. See Aranda v. Ins. Co. of N. Am., 748 S.W.2d 210 (Tex. 1988). Thus, we affirm the judgment in all respects except for the award of loss to credit reputation. We therefore modify the judgment to delete that portion of the judgment awarding Morris damages for his loss of credit reputation.
Lance Morris brought this suit against TMI, alleging that it acted in bad faith and violated the Texas Insurance Code because it failed to properly investigate Morris=s claim for workers= compensation benefits, and it delayed paying workers= compensation benefits due him. Morris alleged that, on June 12, 2000, while working for the Justin Volunteer Fire Department, he received an on-the-job injury to his spine. Then, in March 2003, Morris required emergency treatment for his back injury. According to Morris, TMI initially promised to pay for surgery on his back, but only days after the surgery reneged on this promise. Morris alleged that the requested treatment for his injury was reasonable and necessary, but TMI delayed and denied payment for the previously pre-authorized medical treatment, with significant consequences to him. Morris also alleged that the Texas Workers= Compensation Commission (ATWCC@) had fully adjudicated that TMI wrongfully denied his claim for benefits. Morris claimed that, as a result of the wrongful denial, TMI violated the Texas Insurance Code, breached its common-law duty of good faith and fair dealing, and violated the Deceptive Trade Practices Act (ADTPA@).
TMI answered and later amended its answer to add a counterclaim for fraud. In the counterclaim, TMI alleged that Morris strained or sprained his back in 1998, two years before the June 12, 2000 injury, and that he falsely represented to the TWCC that he did not have a pre-existing back injury. TMI claimed that Morris knew this representation was false when he made it, and that TMI relied on it and was injured by having to pay for benefits that would not have been due if the extent of Morris=s back problems had been fully disclosed.
In March 2006, the case was tried to a jury. The jury returned a 10-2 verdict in Morris=s favor on his claims for bad faith and statutory violations. The jury awarded Morris $50,000 for past mental anguish; $25,000 for past damage to his credit reputation; $50,000 for future damage to his credit reputation; and $120,000 for attorney=s fees. The jury also awarded Morris $500,000 in additional damages because it found that TMI knowingly violatED the Texas Insurance Code. The jury declined to find that TMI acted with malice or that Morris defrauded TMI. On May 18, 2006, the trial court signed a final judgment for Morris, and awarded the amounts found by the jury, except for the $500,000 in additional damages, which it reduced to $250,000. This appeal and cross-appeal followed.
Analysis of TMI=s Issues
In its first three issues, TMI contends that there is no evidence to support:
$ the jury=s finding that TMI engaged in unfair and deceptive acts and practices in violation of the Texas Insurance Code,
$ the jury=s finding that TMI violated the Insurance Code knowingly, and
$ the damage awards for mental anguish and lost credit reputation.
In its fourth issue, TMI contends that the trial court erroneously instructed the jury on both valid and invalid theories of liability. In its fifth issue, TMI contends that no cause of action exists for breach of the duty of good faith and fair dealing against a workers= compensation carrier, or alternatively, any such cause of action should be abolished.
I. Legally Sufficient Evidence Supports the Jury=s Finding that TMI Engaged in Unfair and Deceptive Acts or Practices in Violation of the Texas Insurance Code.
In its first issue, TMI contends that no evidence supports the jury=s finding that TMI engaged in unfair and deceptive acts or practices in violation of the Texas Insurance Code because no evidence shows that it misrepresented the policy or failed to explain the basis for the dispute, and no evidence shows that it knew or should have known that coverage was reasonably clear. TMI also contends that the evidence conclusively shows that it had a reasonable basis to dispute Morris=s claim.
As we explain below, we conclude that sufficient evidence supports the jury=s findings on unfair settlement practices, specifically that TMI failed in good faith to settle when liability became reasonably clear and that it refused to pay a claim without conducting a reasonable investigation. For reasons explained in more detail in TMI=s fourth issue, we will not address the sufficiency of the evidence to support the misrepresentation claims under the Insurance Code.
A. Standard of Review.
We will sustain a legal sufficiency or Ano‑evidence@ challenge if the record shows one of the following: (1) a complete absence of evidence of a vital fact; (2) rules of law or evidence bar the court from giving weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla; or (4) the evidence establishes conclusively the opposite of the vital fact. City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005) (citing Robert W. Calvert, ANo Evidence@ and AInsufficient Evidence@ Points of Error, 38 Tex. L. Rev. 361, 362‑63 (1960)). The evidence is legally sufficient if it would enable reasonable and fair‑minded people to reach the verdict under review. Id. at 827. In determining whether there is no evidence of unfair settlement practices under the Insurance Code, we review all the evidence, crediting favorable evidence if reasonable jurors could credit it, and disregarding contrary evidence unless reasonable jurors could not disregard it. See Minn. Life Ins. Co. v. Vasquez, 192 S.W.3d 774, 777 (Tex. 2006). We cannot substitute our judgment for that of the jury, so long as the evidence falls within the zone of reasonable disagreement. See City of Keller, 168 S.W.3d at 822.
B. The Evidence is Legally Sufficient to Support the Judgment.
The judgment against TMI is predicated on the jury=s affirmative answer to Question No. 2. That question asked whether TMI engaged in any one or more of eight unfair and deceptive acts or practices under sections 541.060 and 541.061 of the Insurance Code. It instructed the jury to consider the following ways in which an insurer can engage in an unfair or deceptive act:
Making any misrepresentation of an insurance policy by:
a. making an untrue statement of fact; or
b. failing to state a material fact that is necessary to make other statements made not misleading, considering the circumstances under which the statements were made; or
c. making any statement in such manner as to mislead a reasonably prudent person to a false conclusion of a material fact; or
d. failing to disclose any matter required by law to be disclosed; or
Engaging in any of the following unfair settlement practices with respect to a claim by an insured or beneficiary:
a. misrepresenting to a claimant a material fact or policy provision relating to coverage at issue; or
b. failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim with respect to which the insurer=s liability has become reasonably clear; or
c. failing to provide promptly to a policyholder a reasonable explanation of the basis of the policy, in relation to the facts or applicable law, for the insurer=s denial of a claim or for the offer of a compromise settlement of a claim; or
d. refusing to pay a claim without conducting a reasonable investigation with respect to the claim.
(emphasis added). On appeal, TMI contends that no evidence supports any of the acts listed. However, we need not look at all eight acts to resolve this issue. We need look only at TMI=s claim that no evidence shows that it (1) failed to attempt in good faith to effectuate a prompt, fair, and equitable settlement when liability was reasonably clear, or (2) failed to conduct a reasonable investigation. See Tex. Ins. Code ' 541.060(a)(2)(A), 541.060(a)(7). We have italicized these two acts in the charge question. As to these two acts, TMI contends that its records showed that Morris had a minor injury that resolved in 2000 and a new and more severe injury in 2003 caused by an unrelated incident, and therefore the evidence conclusively shows that it had a reasonable basis to deny or delay paying Morris=s workers= compensation claim based on the June 12, 2000 injury.
1. Morris=s burden on a section 541.060(a)(7) claim is the same as for a common-law bad faith claim.
As a preliminary matter, the parties dispute Morris=s exact burden in proving that TMI failed to conduct a reasonable investigation. TMI claims that the standard for liability under the Insurance Code is the same as that applied to a breach of the duty of good faith and fair dealing. The dispute centers over whether Morris need only show that TMI failed to conduct a reasonable investigation or if he also must show that the claim was covered and compensable. See id. ' 541.060(a)(7) (providing that an insurer engages in an unfair settlement practice by Arefusing to pay a claim without conducting a reasonable investigation with respect to the claim@). If the burden includes both factsCi.e., no reasonable investigation plus a covered claimCthe burden is the same as for a common-law bad faith claim. For the reasons explained below, we agree with TMI that Morris=s burden on this Insurance Code violation is the same as in a common-law bad faith claim.
a. The state of common-law bad faith post-Giles.
Before 1997, the common law provided that an insurer breached its duty of good faith and fair dealing when it Ahad no reasonable basis for denying or delaying payment of the claim, and that it knew or should have known that fact.@ See, e.g., Transp. Ins. Co. v. Moriel, 879 S.W.2d 10, 18 (Tex. 1994); see also Aranda, 748 S.W.2d at 213. Then, in Universe Life Ins. Co. v. Giles, eight of the nine justices on the Texas Supreme Court adopted as the standard of liability for common-law bad faith claims the Insurance Code=s language defining as an unfair settlement practice an insurer=s failure to settle a claim when Athe insurer=s liability has become reasonably clear.@ See 950 S.W.2d 48, 56 (Tex. 1997) (applying standard of former article 21.21, section 4(10)(a)(ii) of the Insurance Code, which prohibited Afailing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim with respect to which the insurer=s liability has become reasonably clear@); see also State Farm Fire & Cas. Co. v. Simmons, 963 S.W.2d 42, 44 (Tex. 1998) (noting that, in Giles, A[t]his Court recently clarified the standard for recovery in bad faith cases@). The plurality=s stated purpose of recasting the standard in positive terms was to eliminate conflicts between the negative formulation of the common-law standard and the no-evidence standard of review, and to unify the common-law and statutory standards for bad faith. See Giles, 950 S.W.2d at 50B52, 55B56.
Thus, post-Giles, an insurer breaches its duty of good faith and fair dealing Aby denying or delaying payment of a claim if the insurer knew or should have known that it was reasonably clear that the claim was covered.@ Id. at 49. Evidence that merely shows a bona fide dispute about the insurer=s liability on the contract does not rise to the level of bad faith. State Farm Lloyds v. Nicolau, 951 S.W.2d 444, 448 (Tex. 1997); Moriel, 879 S.W.2d at 17. Bad faith also is not established if the evidence shows the insurer was merely incorrect about the factual basis for its denial of the claim, or about the proper construction of the policy. Moriel, 879 S.W.2d at 18. Further, there can be no claim for bad faith when an insurer has denied a claim that is, in fact, not covered and the insurer has not otherwise breached the contract. See Republic Ins. Co. v. Stoker, 903 S.W.2d 338, 341 (Tex. 1995); Lundstrom v. United Servs. Auto. Ass=n-CIC, 192 S.W.3d 78, 96 (Tex. App.CHouston [14th Dist.] 2006, pet. denied).
However, an insurer may breach its duty of good faith and fair dealing if it fails to reasonably investigate a claim when determining whether its liability is reasonably clear. See Provident Am. Ins. Co. v. Castañeda, 988 S.W.2d 189, 197B98 (Tex. 1998); Giles, 950 S.W.2d at 56 n.5; Nicolau, 951 S.W.2d at 448. An insurer cannot insulate itself from bad faith liability by investigating a claim in a manner calculated to construct a pretextual basis for denial. See Simmons, 963 S.W.2d at 44; Nicolau, 951 S.W.2d at 448. Moreover, an insurer=s reliance on an expert report, standing alone, will not necessarily shield the carrier if evidence shows that the report was not objectively prepared or that the insurer=s reliance on the report was unreasonable. See Nicolau, 951 S.W.2d at 448. Evidence casting doubt on the reliability of the insurer=s expert=s opinions may support a bad-faith finding. Id.
Morris argues that the Areasonably clear@ liability standard does not apply to a claim based on the failure to conduct a reasonable investigation, because the duty of good faith and fair dealing may be breached by a showing that the carrier either (1) knew or should have known that it was reasonably clear that the claim was covered, or (2) failed to investigate the claim reasonably. See Giles, 950 S.W.2d at 56 n.5 (A[A]n insurance company may also breach its duty of good faith and fair dealing by failing to reasonably investigate a claim.@). Likewise, liability under Insurance Code section 541.060(a)(7) for the failure to reasonably investigate is separate from the liability imposed under section 541.060(a)(2) for the failure to settle a claim when the insurer=s liability has become reasonably clear. Morris contends that, because the failure to reasonably investigate is a separate standard, the common-law Areasonably clear@ standard does not apply to a failure to conduct a reasonable investigation, under either the common law or Insurance Code section 541.060(7). The significance of Morris=s construction is that an insurer could be found liable for a deficient investigation even when it had a reasonable basis for denying the claim. The anomaly we mentioned aboveCthat an insurer could be held liable for the failure to reasonably investigate even when it had a reasonable basis for denying the claimCtroubled the Texas Supreme Court.
b. The Texas Supreme Court concludes that liability cannot be assessed unless there is both a failure to conduct a reasonable investigation and liability is reasonably clear.
A majority of the Court rejected Morris=s contention in Provident American Insurance Co. v. Castañeda, 988 S.W.2d at 189. In Castañeda, a jury found the insurer liable for violations of the Insurance Code and the DTPA for failing to pay a medical claim the insurer claimed was excluded under the policy it issued to the plaintiff. Id. at 192. No common-law bad faith claim was submitted to the jury. Id. at 193. The Court conducted a no-evidence review based on the wording of the jury instructions concerning the insurer=s failure to Aeffectuate a prompt, fair, and equitable settlement of a claim when liability has become reasonably clear@ and a related question. Id. at 192B93. Although a jury instruction on the failure to conduct a reasonable investigation was not part of the Court=s analysis, it explained that a plaintiff claiming that its insurer conducted a pretextual investigation to wrongfully deny a claim is still required to show that coverage was reasonably clear:
Castañeda and the dissent contend that because Provident American gave different reasons for denying the claim at different times, there is some evidence that the denial was pretextual, citing Nicolau and Simmons. In Nicolau, the Court concluded that there was some evidence that the carrier knew that the expert report on which it relied was of questionable validity. In Simmons, the Court concluded that there was evidence that the investigation was biased and outcome‑oriented because there was evidence that the carrier knowingly and repeatedly ignored evidence that the insureds did not burn down their home and that they had no motive for arson. Our use of the term Apretextual@ in Nicolau and Simmons did not mean that an insured is relieved from its burden of offering evidence that liability had become reasonably clear or that there was no reasonable basis for denying the claim. We did not redefine the common‑law tort of bad faith or the legal sufficiency standard of review for article 21.21 cases to include a mechanism by which a factfinder could conclude that the denial was pretextual even though there was a reasonable basis for denying the claim. The use of the concept Apretextual@ was another way of saying that there must be some evidence that there was no reasonable basis for denying the claim or that liability was reasonably clear. Here, there is no evidence that Provident American ignored information that would lead a reasonable person to conclude that liability under the policy was reasonably clear or that there was no reasonable basis to deny the claim.
988 S.W.2d at 197B98 (footnotes omitted; emphasis added).
The Nicolau and Simmons cases cited by the Court involved common-law bad faith claims that may be characterized, either in whole or in part, as based on the failure to conduct a reasonable investigation. See Simmons, 963 S.W.2d at 44B45 (holding evidence legally sufficient to show insurer breached duty of good faith and fair dealing by denying plaintiffs= claim based on a biased investigation intended to construct a pretextual basis for denial); Nicolau, 951 S.W.2d at 448B49 (upholding finding of bad faith based on evidence insurer knew or should have known it was reasonably clear the claim was covered, when there was evidence that reports prepared by insurer=s expert were not objectively prepared, the insurer was aware of this, its reliance on the reports was pretextual, and there was evidence the insurer did not conduct an adequate investigation). The Castañeda court clarified that, under either the common law or the Insurance Code, to recover damages resulting from a wrongful denial of a claim, plaintiffs must show more than a mere failure to reasonably investigate the claim; they must also show that liability was reasonably clear. 988 S.W.2d at 198; Tex. Mut. Ins. Co. v. Ruttiger, ___ S.W.3d ___, 2008 WL 2930096, at *5 n.18 (Tex. App.CHouston [1st Dist.] July 31, 2008, no pet. h.) (noting that A[t]he standards for liability under sections 541.060(a)(2) and (a)(7) and for an insurer=s breach of the common law duty of good faith and fair dealing are similar and are frequently discussed together by Texas courts@); see also United Svcs. Auto. Ass=n v. Croft, 175 S.W.3d 457, 469 (Tex. App.CDallas 2005, no pet.) (citing Nicolau for the proposition that A[w]ithin [the duty of good faith and fair dealing] is an insurer=s obligation to conduct an adequate investigation of the claim@).
The alternative that Morris urgesCallowing an insurer to be found liable for conducting a pretextual investigation even though it had a reasonable basis for denying the claimCis plainly inconsistent with the common law duty of good faith and fair dealing as expressed in Casteñeda. Moreover, such a result would frustrate not only the goal of unifying the common-law and statutory standards for bad faith, see Giles, 950 S.W.2d at 55, but also the general rule that there can be no claim for bad faith when an insurer has denied a claim that is not covered. See Stoker, 903 S.W.2d at 341; Lundstrom, 192 S.W.3d at 96. Therefore, we conclude that a plaintiff seeking bad faith damages based on a violation of section 541.060(a)(7), which proscribes as an unfair settlement practice an insurer=s refusal to pay a claim Awithout conducting a reasonable investigation with respect to the claim,@ must demonstrate that a proper investigation would have revealed that coverage was reasonably clear. See Casteñeda, 988 S.W.2d at 198; Tex. Ins. Code ' 541.060(a)(7).
We turn next to consider if the evidence is legally sufficient to support the jury=s finding of liability under Texas Insurance Code sections 541.060(a)(2) and 541.060(a)(7).
2. TMI=s liability was reasonably clear.
TMI claims that no evidence supports the jury=s finding that TMI had Ano reasonable basis@ to question whether the back strain Morris sustained on June 12, 2000 was a cause of his need for back surgery in April 2003. According to TMI, its records showed that Morris suffered only a minor injury for which he received one month of chiropractic treatment; he returned to work without restrictions after missing only one shift. In addition, TMI claims, the medical records available from Morris=s surgeon in April 2003 reflected that Morris=s injury requiring surgery occurred when he slipped or fell off a fire truck, not while lifting a patient out of a ditch as occurred on June 12, 2000. Thus, because TMI=s records indicated a minor injury while lifting a patient out of a ditch, that had fully resolved in 2000, and a Anew and more severe injury in 2003 cause[d] by a different incident,@ it believed it had grounds to dispute whether Morris=s surgery was connected with the 2000 injury.
The question before us is whether more than a mere scintilla of evidence exists to show a refusal to pay a claim without conducting a reasonable investigation and a failure to settle when liability became reasonably clear. The following evidence presented to the jury supports both findings.
a. The June 12, 2000 injury and the surgery.
On June 12, 2000, while working for the Justin Volunteer Fire Department, Morris hurt his back while lifting a victim of a motor vehicle accident out of a ditch. The fire department reported the injury to its worker=s compensation carrier, TMI, which accepted the claim. Morris visited a chiropractor, Dr. Waldrop, the day he was injured. Dr. Waldrop=s initial medical report to the TWCC noted that Morris was injured when he Alifted a patient and felt sharp shooting pain in the lumbar portion of his spine.@ The doctor=s clinical assessment indicated that Morris had Apalpable muscle spasms at the L-4 B L-5 level of his spine.@ Morris received several chiropractic treatments from Dr. Waldrop over the next two weeks. After that, he saw Dr. Waldrop periodically over the next two and one-half years. Morris missed only a brief period of work as a result of the injury.
In February 2003, Morris married and moved from Justin to Sugar Land. After the move, Morris began seeing another chiropractor, Dr. King. At some point, Morris began experiencing increasing pain in his back, and on March 23, 2003, Morris went to the emergency room at Methodist Sugar Land Hospital. The hospital referred Morris to a neurosurgeon, Dr. Charles Neblett, who diagnosed Morris with a herniated disc. Dr. Neblett requested preauthorization from TMI to perform an AL4-5 L5-S1 lumbar laminectomy.@ TMI granted the request for pre-authorization on April 1, 2003. Morris=s surgery took place the next day.
b. The initial inadequate investigation.
On April 3, 2003, TMI transferred Morris=s file from one adjuster to Joy Rodgers. The first day Rodgers took documented action on the file was April 7. On that day, she reviewed the file and called Bill Mitchell, the fire chief of the Justin Volunteer Fire Department, to find out about Morris=s injury on June 12, 2000. According to Rodgers=s claim diary, Mitchell told her that Morris returned Aat full duty without any problems.@ On that same day, April 7, Rodgers prepared and filed a ANotice of Refused or Disputed Claim,@ giving notice that TMI disputed the claim.
By deposition, Rodgers testified that she knew she had a duty to investigate the claim, which included a procedure known as a Athree-point contact.@ A three-point contact means contacting the injured worker, the employer, and the medical provider. However, Rodgers admitted that she did not complete the three-point contact before disputing the claim.
Before Rodgers denied the claim, neither she nor anyone else ever spoke to Morris=s surgeon, Dr. Neblett, even though the documentation submitted for preauthorization by Dr. Neblett indicated that the need for surgery arose from the June 2000 injury. Nor did she talk to any other treating doctor. Rosalind Thompson, a TMI claims supervisor, agreed that before TMI denied the claim it did not ask a doctor whether Morris=s June 2000 injury was a producing cause of the surgery, even though TMI knew the names of the two doctors who had treated Morris from the time of the 2000 injury to days before his surgery. And, although Rodgers=s claims diary noted that she called the surgeon, Dr. Neblett, she spoke only with an administrative person in his office to let them know that TMI was disputing the claim. Morris=s expert testified that Dr. Neblett was the best person for Rodgers to speak with in conducting an investigation because he saw and physically examined Morris.
Rodgers did not even speak with Morris before denying the claim. And, initially, MitchellCthe only person Rodgers said she did speak withCdid not recall speaking to Rodgers, and Mitchell testified that he would not have told her Morris returned at full duty with no problems. And, Rodgers apparently did not inquire into any of the details of Morris=s injury. At best, the evidence showed that she made only a cursory inquiry with Mitchell into Morris=s status when he returned to duty.
One fact that seemed to play heavily in Rodgers=s decision to dispute coverage was that the description Morris gave for how he injured himself in 2000 varied from the cause contained in TMI=s records. Even with this variation, the date Morris gave for his injuryCJune 12, 2000Cwas correct. Before disputing the claim, Rodgers never asked Morris about this discrepancy. Although a field investigator was assigned to speak with Morris and apparently did speak with him a week or so after the surgery, the investigator apparently did not ask Morris about the discrepancy and did not ask him for medical records.
Frank Weedon, Morris=s insurance expert, also testified. He explained that Rodgers=s investigation of the claim was not reasonable because she failed to conduct a Athree point contact@; she did not speak to either Morris or his treating doctors, and at most had only a brief discussion with Bill Mitchell before filing the dispute on April 7, 2003, the same day she first reviewed the file. Although Rodgers testified that she felt she did not need to speak with a doctor to learn more about Morris=s physical condition before she disputed the claim, she knew about the three point contact and agreed that was the proper way to conduct an investigation. Reasonable jurors could have chosen not to believe Rodgers=s claim that she did not need to speak with a doctor in this particular case.
c. TMI=s receipt of evidence showing back treatments during the crucial time period of 2001-2003, its failure to forward it because of alleged coding error, and its continuing refusal to settle.
TMI continued to dispute coverage for the next several months. It said it did not receive an authorization from Morris to obtain medical records; however, Morris faxed an authorization form to TMI no later than mid-April. The form was signed by his wife because he was back in the hospital at the time. TMI said that it would not be able to obtain any records with this form because Morris himself did not sign it, but it also appears that TMI did not attempt to obtain any records with the form. In addition, Morris said that no one at TMI ever asked him for another authorization or for his medical records, which, again, were at his home.
Morris eventually retained attorneys to represent him in the dispute with TMI. On August 29, 2003, Morris=s attorneys faxed to TMI some of Morris=s medical records, including a page of treatment notes from Dr. Waldrop, the chiropractor Morris saw after his injury in June 2000. This page of treatment notes documented that Dr. Waldrop treated Morris between November 2001and January 2003. Morris=s attorneys specifically sent this page because TMI said it had no record of treatments for Morris between 2001 and 2003. The notes indicated, among other things, that Morris had AL5/S1 n. root disc radiculopathy.@ The TMI employee who was responsible for organizing the medicals testified that TMI failed to forward this important page because it was wrongly coded. She explained that this page was behind another page that was an approval for a new doctor, Dr. King, who saw Morris from February to April just before the surgery. Seeing the approval letter, she coded the documents following it as relating to the approval letter, apparently without checking to ensure that was accurate. A TMI employee agreed that no other medical documents were wrongly coded.
In November 2003, Morris and TMI participated in a benefit review conference at the TWCC offices, but the dispute was not resolved at that time. TMI requested that Morris submit to a medical examination by a doctor of its choice, and Morris agreed. TMI chose Dr. Stephen DeYoung to examine Morris. On January 7, 2004, TMI sent Dr. DeYoung a letter asking him to determine, among other things, whether the lumbar herniations that were surgically treated in April 2003 were causally related to the Alumbar strain@ of June 2000. TMI represented that it had attached Aall of the medical records currently available@ to it for Dr. DeYoung=s review. However, TMI did not forward any medical records from Dr. Waldrop, stating that it had Ano documentation of medical treatment from the DOI, to 02/19/03@Ceven though it had received the page of treatment notes from 2001B2003. In its summary of Morris=s medical condition, TMI also pointed out that Dr. King=s medical records reflected that the Amechanism of injury@ was different than that reported by the employer. The first report of injury, on June 12, 2000, indicated that Morris strained his back after carrying a patient out of a ditch, while Dr. King reported that he Afell off the fire truck after slipping off tread steps.@ No one from TMI ever asked Morris about this discrepancy.
d. Dr. DeYoung reaches a tentative opinion in favor of Morris if records show no treatments between the 2000 injury and 2003 and no injury before that time.
On January 22, 2004, Dr. DeYoung examined Morris. He also obtained both an oral and written medical history from Morris. Morris told Dr. DeYoung that he was injured on June 12, 2000, when carrying a patient on a backboard out of a ditch to an ambulance, and that he saw Dr. Waldrop for chiropractic treatments until he moved to Sugar Land and began seeing Dr. King in 2003. Morris did not tell Dr. DeYoung about an earlier injury he sustained in 1998 for which received chiropractic treatments from Dr. Waldrop. At trial, Morris explained that he recovered fully from that incident and did not consider it an injury, and for that reason did not tell Dr. DeYoung about it. Morris also explained that he did not fall off a truck; he began to fall and caught himself. The act of catching himself caused the injury.
Dr. DeYoung wrote to TMI explaining that, given the lack of medical records provided, he could not determine whether Morris aggravated and accelerated his pre-existing lumbar disc degeneration and spondylosis, which ultimately led to a herniation, or whether the herniation was secondary to a disease of life. Therefore, Dr. DeYoung opined that (1) if Morris had no history of lower back difficulty prior to the work injury on June 12, 2000, and (2) if the medical records support ongoing difficulty with the lower back from June 12, 2000 until he sustained the herniations in April 2003, he would give Morris Athe benefit of the doubt and causally relate the disc herniations to the lumbar strain of June 2000 as a result of aggravation and acceleration of the pre-existing lumbar disc degeneration and spondylosis.@ Even though it had medical records from the very years Dr. DeYoung was interested in, and even though it had no records of an earlier injury, TMI continued to dispute the claim. It advised Morris that he would have to schedule a second benefit review conference to resolve the dispute.
e. The TWCC Benefit Review Officer rules that Morris=s herniated disc was related to the 2000 injury.
A second benefit review conference was held in June 2004, more than a year after the surgery. Again the parties were unable to reach an agreement, at least in part because TMI claimed it still had no medical records reflecting continuing chiropractic treatments by Dr. Waldrop for Morris=s June 12, 2000 injury. According to TWCC documentation, TMI=s position was that Dr. DeYoung=s ability to determine causation was hampered because the records were not available; Morris countered that he had provided the records to TMI several times and had no control over whether TMI forwarded them to Dr. DeYoung. The benefit review officer noted the gap in the medical records, but still recommended the payment of benefits to Morris. The review officer found the following:
A review of the initial medical records from Dr. Waldrop noted the claimant=s symptoms, which are consistent with the current diagnoses at L4-L5 and at L5-S1. There are medical records from other doctors in the file supporting a causal connection between the findings on the diagnostic studies performed in 2003 and the original injury.
(emphasis added). In reaching her conclusion, the benefit review officer also found significant the reference to radiculopathy in Dr. Waldrop=s notes of November 21, 2001. TMI declined to accept this recommendation, and a benefit contested case hearing was scheduled for July 2004.
f. TMI again forwards the medical records to its medical expert without including the 2001B2003 notes and loses at the contested case hearing.
On July 1, 2004, in preparation for the contested case hearing, TMI forwarded to Dr. DeYoung medical records showing Morris=s Ainitial treatment@ with Dr. Waldrop, and asked him to review the records and determine whether the April 2003 herniations were the result of a pre-existing condition or the June 2000 injury. Once again, TMI did not include the page of Dr. Waldrop=s records showing that Morris had a number of chiropractic treatments between 2001 and 2003. In response, Dr. DeYoung reported that the records were Alimited@ and Adid not provide any detail with respect to his history and examination.@ He also noted that the records showed that Morris Awas last treated by Dr. Waldrop in January 2001.@ This time, Dr. DeYoung opined that if Morris did not receive any medical treatment for his lower back between January 2001 and February 2003 (when he saw Dr. King), he would attribute Morris=s condition Amore to a disease of life than the work related injury.@
At the contested case hearing, the TWCC received sworn testimony and evidence, and ultimately determined that A[t]he herniations in [Morris=s] lumbar spine at levels L4-5 and L5-S1 were caused and/or aggravated by, and naturally resulted from, his June 12, 2000 injury.@ Consistent with the benefit review officer=s recommendation, the TWCC noted that the medical evidence showed that Morris was complaining of an L5-S1 radiculopathy in November 2001 when he was receiving treatment from Dr. Waldrop. The TWCC=s decision reflected that it was based largely upon Morris=s testimony that he had no prior history of back problems, and that he had required continuous treatment since the June 12, 2000 incidentCtestimony that satisfied the conditions under which Dr. DeYoung would find causation. The TWCC ordered TMI to pay medical benefits to Morris. TMI did not appeal this decision.
g. TMI learns about the 1998 back strain and points to it or to a new 2003 injury as the cause of the herniated disc.
After Morris filed suit against TMI and discovery ensued, TMI learned that Morris strained or sprained his back in 1998 when he slipped on or fell from the running board of a fire truckCtwo years before the June 12, 2000 injury. At that time, Morris missed two weeks of work and underwent numerous chiropractic treatments. TMI counterclaimed for fraud, alleging that Morris fraudulently testified before the TWCC that he had no back injuries before the June 2000 incident.
When Dr. DeYoungCthe doctor who in his first opinion had given Morris the benefit of the doubt in determining that his June 2000 injury was causally related to the 2003 herniated discCwas later deposed, he was asked whether the medical information concerning Morris=s 1998 back injury and the treatments by Dr. Waldrop after the June 2000 incident changed his earlier opinion. Dr. DeYoung testified that, based on this information, he would conclude that Morris=s June 2000 injury was not causally related to the herniated disc requiring surgery in April 2003. However, on cross-examination, Dr. DeYoung admitted that Dr. Waldrop=s omitted treatment notes did reflect Aperiodic@ treatment between 2000 and 2003, the specific time frame Dr. DeYoung had indicated to TMI was most important to his evaluation. He also acknowledged that Morris=s medical records reflected that Morris had between 25 and 30 treatments between June 2000 and March 2003, contrary to TMI=s representation that it had no documentation of treatment in that time frame. Dr. DeYoung also admitted that, while Morris had received chiropractic treatments before June 2000, he was not receiving treatment from a medical doctor, and he was able to return to work after the 1998 incident.
TMI contends that Dr. DeYoung was not misled about Morris=s treatment with Dr. Waldrop because Morris gave him a verbal medical history that included Dr. Waldrop=s treatment of him between June 12, 2000 and January 1, 2003. However, Dr. DeYoung testified that if an insurance company wrongly told him they did not have documentation of treatment when they did have it, he would be Aconcerned that I was being a little misled if I didn=t have all of the correct information.@ Dr. DeYoung did not testify that the 1998 injury was the sole cause of the herniated disc; in fact, no doctor at trial testified that the 1998 injury was the sole cause of the herniated disc. Morris=s expert testified that TMI could refuse the claim only if another event was the sole cause of the herniated disc. If the 2000 injury was a 1% cause of the herniated disc because it aggravated an earlier condition, it would be compensable and causally related.
Thus, the jury had before it proof that the claims adjuster denied/disputed the claim and refused to pay it the first day she looked at the file and that, in deciding to deny or dispute coverage, she ignored accepted methods of investigating a claim. One of her alleged reasons for disputing coverage was because the description of the original injury did not match the injury shown on file, but she never asked Morris about this. The jury had proof that Morris faxed TMI his relevant medical records, and signed a release for TMI, but TMI failed to forward a crucial page to its medical expert and failed to do so on more than one occasion. TMI said it did not forward the page of notes because it was wrongly coded, but no other page of medical notes was wrongly coded. Finally, the jury had proof before it that TMI thought either an undisclosed earlier injury or a new injury in 2003 caused Morris=s herniated disc; yet, TMI never proved a new injury and never proved that the earlier injury was the sole cause of the herniation requiring surgery.
h. TMI=s reasons for why the evidence is insufficient.
(i) The medical history did not show continuing treatment after the 2000 injury.
TMI claims that nothing in its file reflected that Morris was treated after the initial injury on June 12 and that Rodgers confirmed this by speaking with Mitchell, who, according to Rodgers, said that Morris returned to full duty without any problems. TMI also claims that further investigation of this did not reveal much more. According to TMI, [a]lthough TMI requested that Morris provide medical records, few of those records were provided.@
However, this review of the evidence is one-sided in TMI=s favor, and ignores the conflicting evidence. First, Mitchell testified he could not remember speaking with Rodgers, and stated that he would not have told her that Morris returned to full duty. Second, Morris=s lawyers sent medical records to TMICincluding the page of treatment notes from Dr. WaldropCshowing a number of visits by Morris between 2001 and 2003. Once he was shown the records, even Dr. DeYoung agreed that Morris received 25 to 30 treatments between June 12, 2000 and April of 2003, during the time frame he considered critical to his evaluation.
At trial, TMI admitted that it had this page of notes and that it never gave the notes to Dr. DeYoungCeven though he stated how significant such notes would be to his assessment of a connection between the 2000 injury and the 2003 surgery. But TMI said it overlooked the page because it was wrongly coded. Apparently, this was the only page of medical notes that was wrongly coded; the remainder of the medical records made it to Dr. DeYoung. As a result of the coding error, Dr. Waldrop=s notes from 2001B2003 repeatedly failed to make it to Dr. DeYoung. A jury could have found it too coincidental that out of all the medical records the only one wrongly coded was the page showing a causal link between the 2000 injury and the 2003 surgery.
In a related argument, TMI contends that Morris hampered its investigation by providing it with a release form signed by Morris=s wife. TMI contends that a form signed by anyone other than Morris would not have entitled TMI to Morris=s records. However, TMI also had an authorization signed by Morris. Before the second benefit review conference, at TMI=s request, Morris signed an authorization for Dr. Waldrop=s records. In addition, TMI points to no evidence that Dr. Waldrop=s office refused to provide medical records based on either authorization, and Morris testified that TMI never told him it could not use the authorization form signed by his wife. Morris also testified that TMI never called and asked for the records. Therefore, whether or not the authorization signed by Morris=s wife would have enabled TMI to obtain Morris=s medical records is irrelevant, because the evidence does not show that TMI ever sought to obtain any records with it and was refused, and the evidence affirmatively shows that Morris himself gave TMI an appropriate authorization for Dr. Waldrop=s records.
(ii) The 1998 injury did not preclude a finding by TMI that liability was reasonably clear.
We next consider two arguments TMI urges: (1) that liability never became reasonably clear because of the undisclosed 1998 back strain or sprain, and (2) that if Morris had disclosed the 1998 injury before trial, Dr. DeYoung would have concluded that Morris=s back surgery in April 2003 was not related to his workplace injury in June 2000, and the TWCC Alikely@ would have concluded that Morris was not entitled to benefits. We address each of these complaints in turn.
First, TMI does not dispute that Morris suffered a compensable injury on June 12, 2000; its dispute is over the extent of the injury, i.e., whether the June 12, 2000 injury was a producing cause of the herniation requiring surgery. In effect, TMI suggests that its liability for Morris=s surgery has never become Areasonably clear@ because of Morris=s allegedly undisclosed back strain or sprain in 1998.
However, under the law governing workers= compensation carriers, the term Ainjury@ includes the aggravation of a pre-existing condition. See Tex. Lab. Code ' 401.011(26); City of Pasadena v. Olvera, 95 S.W.3d 494, 497B98 (Tex. App.CHouston [1st Dist.] 2002, no pet.). To be a defense to coverage, a pre-existing condition or bodily infirmity must be the sole cause of the present disability or incapacity. Oswald v. Tex. Employers= Ins. Ass=n, 789 S.W.2d 636, 640 (Tex. App.CTexarkana 1990, no writ). Dr. DeYoung never opined that Morris=s back injury in 1998 was the sole cause of his herniation. In addition, both a TMI claims supervisor and TMI=s expert, Wayne Davidson, acknowledged that TMI is obligated to pay for aggravation of a pre-existing injury. To deny a claim based on a pre-existing condition, the insurance company must show that the pre-existing condition was the sole cause of the current complaint. Thus, even assuming that any prior back strain Morris may have suffered in 1998 was still affecting him in 2003, the jury could have reasonably concluded that Morris=s compensable back injury in 2000 aggravated a pre-existing condition and so the earlier injury would not have negated TMI=s obligation to pay for required medical treatment.
Second, we consider TMI=s claim that Morris=s alleged duplicity in not revealing the 1998 injury stacked the deck in his favor so that both Dr. DeYoung and the TWCC held in his favor when they otherwise would not have done so. There are four responses to this. To begin with, this was an issue at trial. The jury had before it all the evidence concerning Morris=s failure to tell TMI and his doctors about the 1998 injury and Morris=s explanation for why he did not think to tell anyone about it. Morris explained that he did not fall off the truck, but caught himself as he was about to fall. The act of stopping the fall injured him. He said that he did not think to tell Dr. DeYoung about it because he fully recovered. The jury was asked if Morris committed fraud by not revealing the injury and the jury said he did not commit fraud.
Next, Dr. DeYoung testified via deposition and both parties had the opportunity to ask him what impact the revelation of the 1998 injury had on his diagnosis. Neither partyCincluding TMICdirectly asked him the question.
As to the TWCC=s decision and whether it would stand if the TWCC had known the truth about the 1998 injury, to ask us to engage in Awhat ifs@ regarding the TWCC=s decision at the contested hearing is to ask us to speculate. That we will not do.
Finally, and more importantly, even if Dr. DeYoung and the TWCC knew about the 1998 injury, there was testimony before the jury that TMI could avoid a finding of liability only by concluding that the 1998 injury was the sole cause of the herniated disc and resulting surgery. No one testified that the 1998 injury was the sole cause of the herniated disc.
(iii) The alleged new injury in 2003 and Morris=s inaccurate description of his 2000 injury are not cause for reversal.
TMI also contends that it reasonably disputed coverage because it believed Morris=s surgery was a result of a Anew and more severe injury in 2003,@ and not the June 12, 2000 incident. However, it never offered any evidence of a new injury, or any evidence that another injury necessitated the surgery. Dr. DeYoung testified by deposition that lumbar laminectomies are performed for herniated discs, not back strains, and, based on the medical records, Morris did not have a herniated disc before March of 2003. But on cross-examination in that deposition, Dr. DeYoung also stated that a back strain could lead to a herniated disc. In general, Dr. DeYoung was equivocal concerning the cause of Morris=s herniation, stating that it was Areally not clear@ from the records, but nevertheless he would relate it to Asome activity around the onset of his lower B B of his severe lower back and leg pain and numbness and tingling@ that developed shortly before the surgery. Dr. DeYoung apparently did not, however, take into account the reference in Dr. Waldrop=s treatment notes to radiculopathy, because he testified that Morris=s records did not contain any description of radicular symptoms related to the June 12, 2000 incident.
TMI also points to Morris=s inaccurate description of his 2000 injury as one reason it believed a different injury caused the need for surgery. Although Morris described a different incident to treating doctors in 2003Cslipping on or falling from a fire truckCthe date Morris consistently gave for the incident was the same as that of the undisputedly compensable injuryCJune 12, 2000. But, as we noted earlier in the review of the facts, no one from TMI ever asked Morris about the discrepancy. The jury could have concluded that Morris was merely confused about which incident happened in 2000 or unintentionally attributed his pain in 2003 to slipping or falling of a fire truck instead of lifting a patient out of a ditch on a backboard, or the jury may not have considered the discrepancy significant enough to raise a question about coverage, or, and more importantly, the jury may have viewed TMI=s failure to ask about the discrepancy as one additional indication that TMI did not reasonably investigate the claim.
In any event, as noted above, no evidence was presented that Morris=s 1998 injury was the sole cause of his herniated disc in 2003. This is significant because several experts, including TMI=s expert, testified that TMI could use the 1998 injury as an excuse not to pay for the surgery only if the 1998 injury was the sole cause of the herniated disc. And, as Dr. DeYoung acknowledged, the nature of Morris= injury in 2000 was one that may aggravate a pre-existing back problem and lead to a disc herniation that requires a lumbar laminectomy.
(iv) TMI=s expert testimony does not insulate it from liability.
Finally, citing the testimony of Dr. DeYoung and Wayne Davidson, TMI=s workers= compensation expert, TMI contends that the evidence Aonly shows a bona fide dispute, not clear liability.@ However, the mere fact that a carrier offers expert testimony to support its position at trial does not insulate the carrier from liability. See Nicolau, 951 S.W.2d at 448. Dr. DeYoung admitted that TMI did not give him medical records about Morris=s treatment between 2001 and 2003Cthe very time frame that Dr. DeYoung had told TMI was important to his evaluationCand the jury was entitled to conclude that Dr. DeYoung=s opinions were based on inadequate information. See id. Given the evidence before it, the jury was entitled to discount Dr. DeYoung=s subsequent opinion that Morris=s lumbar herniations were not causally related to the lumbar strain of June 12, 2000. Likewise, the jury was entitled to reject Davidson=s testimony on the ultimate issue of whether TMI acted in bad faith and to accept other evidence. See id. at 450 (noting that the jury, and not a reviewing court, has the responsibility of deciding whether a carrier acted in bad faith).
As Morris points out, other evidence in the record would enable a reasonable jury to conclude that TMI conducted its investigation in a manner designed to defeat coverage rather than to discover the objective facts.
(v) TMI=s claim that Joy Rodgers would not have learned any useful information if she had spoken with Morris=s surgeon, Dr. Neblett, is misplaced.
TMI also claims that the evidence does not support liability for failure to conduct a reasonable investigation because Dr. Neblett could not have given Rodgers information showing that TMI=s liability was reasonably clear. TMI explains that Dr. Neblett Anever examined or treated Morris before April 2003, and there is no evidence that Dr. Neblett could have offered any additional information to show a causal relationship existed.@ We disagree for the reasons below.
First, Morris=s workers= compensation expert, who was experienced handling claims like Morris=s, testified that Dr. Neblett was the best person for Rodgers to call. He explained that Dr. Neblett was the only doctor who had examined Morris to ascertain the exact problem with his back. Rodgers would have spoken with him after the surgery. At that point, he knew the state of Morris=s spine better than anyone elseCbetter even than Dr. Waldrop. Having that information alone would have been useful to her investigation. In addition, even without this testimony, we know that Dr. Neblett spoke with Morris and obtained some medical history, because, for example, he listed the June 12, 2000 date as the date of initial injury in his letter to TMI.
Second, even if Dr. Neblett could not have given Joy Rodgers any information, she also never spoke with Morris himself. Morris had significant knowledge concerning his injury and medical care. He could have told her about the chiropractic visits; he could have explained the discrepancy in what was listed as the cause of the June 12, 2000 injury.
In short, on the day that Rodgers first picked up Morris=s file and decided to dispute liability, she never spoke with the two people who could have enlightened her the most: Dr. Neblett and Morris. Apparently, she desired to act quickly, rather than accurately. We are not persuaded by TMI=s argument.
In summary, on this issue questioning whether the evidence supports a finding of liability, the jury had before it proof that
‚ Medical and non-medical personnel at TMI initially authorized the surgery;
‚ Rodgers, who received the file only days later, disputed coverage the same day she first reviewed the file, ignored accepted methods of investigating a file, may or may not have spoken briefly with Morris=s former employer, and never spoke with the two people who would know the most about the initial injury and/or the current state of Morris=s spine and did not speak with other any treating physician before deciding to dispute the claim;
‚ TMI complained that it had trouble getting Morris=s medical records, yet Morris=s attorneys faxed his complete records to TMI on more than one occasion, Morris=s wife signed a release as early as mid-April, and Morris himself signed a release for his medical records;
‚ TMI did not schedule an examination by a doctor of its choice until eight months after TMI initially disputed the causal connection, which, according to Morris=s expert, was an unreasonable length of time. The contested hearing did not occur until another seven months;
‚ Twice TMI sent medical records to its medical expert claiming that those were all the records when, in fact, one page of visits to Dr. Waldrop was left out of the file;
‚ The page left out of the records sent to Dr. DeYoung showed that Morris saw Dr. Waldrop between the 2000 injury and the 2003 surgery;
‚ Dr. DeYoung informed TMI that he would give Morris the benefit of the doubt if Morris=s records supported ongoing trouble with his back and if he had no back trouble prior to 2000. TMI either did not know its files well enough to know that it had a page of treatment notes from Dr. Waldrop showing 25-30 visits to Waldrop between 2001and 2003, or it chose not to give the sheet to DeYoung. Either way, TMI acted unreasonably.
A reasonable jury could have concluded from this evidence that TMI unreasonably disputed Morris=s claim from the beginning, failed to reasonably investigate the claim, and then intentionally undertook a pretextual investigation designed to support its unreasonable denial of the claim.
Thus, under the applicable standard of review, we hold that there is more than a mere scintilla of evidence to support a finding that (I) TMI failed to attempt in good faith to settle Morris=s claim when its liability had become reasonably clear and (ii) TMI failed to conduct a reasonable investigation. We overrule TMI=s first issue.
II. Legally Sufficient Evidence Supports the Jury=s Finding that TMI Knowingly Violated the Insurance Code.
In its second issue, TMI contends that no evidence supports the finding that TMI knowingly violated the Insurance Code because Aall of the competent evidence shows that TMI and its representatives believed the claim was not valid because the evidence available to TMI showed that the back strain Morris sustained in 2000 was unrelated to the herniated disc he was diagnosed with in 2003.@ According to TMI, the only evidence Morris offered to show TMI acted knowingly was the testimony of its liability expert, which was conclusory, not competent, and thus no evidence.
In Question No. 3, the trial court asked the jury whether TMI knowingly engaged in any of the Aunfair and deceptive acts or practices@ listed in Question No. 2, discussed above. Consistent with section 541.002 of the Insurance Code, the trial court instructed the jury as follows:
AKnowingly@ means actual awareness of the falsity, unfairness, or deception of the act or practice described in Question 2. Actual awareness may be inferred where objective manifestations indicate that a person acted with actual awareness.
See Tex. Ins. Code ' 541.002(1) (defining Aknowingly@). Based on the jury=s affirmative finding, it awarded Morris $50,000 in damages for mental anguish and $500,000 in additional damages, both of which are recoverable only if the Insurance Code violation was committed knowingly. See Vasquez, 192 S.W.3d at 777. The trial court later reduced the award of additional damages to $250,000.
As the Vasquez Court explained, the Texas Insurance Code does not grant policyholders extra-contractual damages merely because the insurer was negligent; instead, these extra damages are reserved for cases in which an insurer knew its actions were false, deceptive, or unfair. Id. at 775. Claims for extra-contractual damages should not be a routine addition to every breach-of-policy case. Id. Appellate courts are required to conduct an exacting review of damages that punish rather than compensate. Id.
We previously reviewed all of the facts in the case. However, the following facts viewed as a whole are sufficient to support a finding by reasonable jurors that TMI was not merely negligent, but that it knowingly failed to effectuate a prompt, fair, and equitable settlement of a claim to which its liability had become reasonably clear, and refused to pay a claim without conducting a reasonable investigation. Certainly, the evidence supports a conclusion by reasonable minded people that persons at TMI knewCwere actually awareCof the unfairness of their actions.
Rodgers was TMI=s adjuster on Morris=s claim and the one who filed the TWCC-21 disputing his claim. Before she was assigned the claim, it had been handled by another adjuster and was not in dispute. She was assigned the claim on April 3, 2003, one day after Morris=s surgery. The first day she took any documented action was April 7, when she filed the dispute. As discussed above, Rodgers admitted that she did not complete the three-point contact before disputing the claim, because she did not contact Dr. Neblett or Morris. Morris=s expert, Frank Weedon, testified that Dr. Neblett, as the treating surgeon, was Ain the best position@ to answer the question whether Morris=s surgery was related to Morris=s injury in 2000. Yet, no one ever contacted Dr. Neblett about Morris=s surgery.
Rodgers also testified that she had no idea how much time she spent investigating Morris=s claim, she did not know if she had all the information she needed before she filed the dispute, and she did not remember if she had any medical information relating to the claim when she filed the TWCC-21 notice that the claim was disputed. She also testified that she had no idea how Morris was supposed to secure medical treatment for his back after TMI disputed his claim.
In addition, Rodgers filed the TWCC-21 after TMI had preauthorized the surgery based on Dr. Neblett=s request, when TMI=s positionCafter a doctor and another TMI employee had looked at the fileCwas that the claim was not in dispute. Weedon testified that Rodgers, as a licensed insurance adjuster, Aknew the rule[s],@ and had a duty to act reasonably, to fairly resolve the claim, and to investigate it. Consequently, he opined, she knew she was mishandling the claim, or, as he stated it, Arunning a red light,@ when she denied the claim without reasonably investigating after TMI had preauthorized Morris=s surgery. He further testified that her actions were false, deceptive, and unfair. He also testified that, once TMI preauthorized the procedure as reasonable and necessary to treat the condition, and there was no dispute concerning compensability or the extent of the injury, to later dispute the claim was an unconscionable act and an unfair claims practice that was Athoroughly prohibited.@ TMI contends that Weedon=s testimony was not competent evidence of a knowing violation because it was conclusory. See Coastal Transp. Co. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 232 (Tex. 2004) (stating that conclusory or speculative opinion testimony is incompetent evidence and cannot support a judgment). However, Weedon explained that the underlying basis for his opinion was his own experience in going through the training to be a licensed insurance adjuster, a position that he held for eight years. Further, Rodgers herself confirmed that she was a licensed adjuster and that she knew the rules for conducting a reasonable investigation.
In fact, no one at TMI ever spoke with Dr. Waldrop, or Dr. King, or Dr. Neblett, the three doctors/chiropractors who would be in a position to testify about Morris=s pre-surgery condition. TMI personnel testified that they did not need to speak with a doctor to dispute the claim. Weedon=s testimony, added to TMI=s complete failure to speak with any of Morris=s doctors, is some evidence supporting the jury=s finding that TMI knowingly violated the Insurance Code.
Additionally, as discussed in greater detail above, TMI falsely represented to Dr. DeYoung that it had received no documentation of Morris=s medical treatment from June 12, 2000 to February 19, 2003, when in fact it had received Dr. Waldrop=s treatment notes from that time period. In addition, TMI agreed to forward the medical records it had to Dr. DeYoung, but it failed to forward the page of Dr. Waldrop=s treatment notes reflecting treatments between 2001 and 2003Cthe specific time frame Dr. DeYoung was requestingCcausing Dr. DeYoung to rely on incomplete information when he issued an opinion supporting TMI=s dispute of Morris=s claim. Concerning TMI=s failure to provide Dr. Waldrop=s treatment notes, Dr. DeYoung testified:
Q: Would it, in your opinion, be fraud for an insurance company to withhold an important piece of medical evidence from a doctor providing an important evaluation?
A: I mean, I B obviously if they knowingly, you know, left something out, I would obviously consider that B consider that wrong.
Dr. DeYoung also acknowledged that the treatment notes TMI withheld from him were from the time period he considered Athe most important time period for making an accurate assessment of [Morris=s] medical condition.@ Although a TMI employee testified that this page of notes was incorrectly coded and explained that the page was incorrectly coded, another TMI employee admitted that no other medical records were wrongly coded. The jury was able to see these witnesses and decide for itself whether it believed the reason for the coding error.
In addition, although TMI claims that it refused to pay because it thought that a new or an older, different injury caused the surgery, Morris=s expert, Weedon, stated that the licensed adjustors would know that a new or older, different injury would displace the 2000 injury as a producing cause of the injury only if the injury was the sole cause of the herniated disc. In fact, Weedon testified that the 2000 injury would still be a producing cause if it only aggravated an earlier injury by as little as one percent. Leading up to and including the contested hearing before the TWCC, TMI had no evidence of an earlier injury.
Weedon also testified that TMI=s delays in (I) obtaining Morris=s full medical records (approximately 14 months), (ii) scheduling a physical examination by a doctor of its choice (eight months), and (iii) scheduling the contested hearing were unreasonable and that TMI employees would know they were unreasonable and unfair, especially since Morris=s operation was already concluded and medical costs were already incurred when TMI first disputed the claim. TMI employees claimed that they told Morris several months after his surgery that he could schedule a benefit review conference; Morris testified that he did not know whether TMI personnel told him to schedule a benefit review conference. He testified that people with the Texas Volunteer Firemen=s Insurance Company, who helped him with the process of finding a lawyer to represent him, Aprobably@ told him to schedule a benefit review conference.
Finally, although Rodgers and others based their continuing denial in part on Morris=s inaccurate description of the cause of his 2000 injury, no one at TMI ever asked Morris about the discrepancy until after the conclusion of the contested hearing during discovery for the bad-faith trial. In addition, personnel at TMI never acknowledged that Morris consistently listed the date of injury as June 12, 2000. The jury certainly could have concluded that a person performing a reasonable investigation would want to know more about this, but TMI never inquired. This also is some evidence of a knowing failure to reasonably investigate and a knowing failure to settle a claim as to which TMI=s liability had become reasonably clear.
Under the applicable standard of review, there is legally sufficient evidence of objective manifestations indicating that TMI acted with actual awareness of the falsity, unfairness, or deception of the two unfair settlement practices discussed above. We overrule TMI=s second issue.
III. Legally Sufficient Evidence Supports the Award of Mental Anguish Damages, But Not the Awards for Loss of Credit Reputation.
The judgment awards Morris a total of $125,000 in actual damages, which includes $50,000 for past mental anguish, $25,000 for past damages to his credit reputation, and $50,000 for future damage to his credit reputation. In its third and fourth issues, TMI contends that legally insufficient evidence supports these damages awarded by the jury. As we explain below, we find evidence in the record to support the award for mental anguish damages.
A. Evidence of Mental Anguish.
TMI contends that the evidence presented to support the mental anguish damages awarded to Morris amounted to no more than mere worry, anxiety, vexation, embarrassment, or anger, which is insufficient to recover such damages. TMI also points to evidence that Morris never sought treatment for any mental or emotional problems, and that he represented to doctors in 2005 and 2006 that he did not suffer from any depression, anxiety, tension, memory loss, or difficulty sleeping. Further, TMI contends that the evidence Morris cited regarding physical pain and discomfort he experienced in connection with his back injury, including the infection he developed after surgery, cannot support an award of damages because it is directly related to his underlying physical injury.
1. Morris=s burden to recover mental anguish damages.
Generally, to recover mental anguish damages, the plaintiff must introduce direct evidence of the nature, duration, and severity of the mental anguish, thus establishing a substantial disruption in the plaintiff=s daily routine. Giles, 950 S.W.2d at 54; Parkway Co. v. Woodruff, 901 S.W.2d 434, 444 (Tex. 1995). Direct evidence may be in the form of the plaintiff=s own testimony, that of a third party, or that of an expert. Parkway Co., 901 S.W.2d at 444. In the absence of direct evidence of the nature, duration, or severity of the mental anguish, we determine whether the record reveals any evidence of a high degree of mental pain and distress that is more than mere worry, anxiety, vexation, embarrassment or anger to support any award of damages. Id. Mental anguish includes the mental sensation of pain resulting from such painful emotions as grief, severe disappointment, indignation, wounded pride, shame, despair, and public humiliation. Id. There must also be evidence that the amount found is fair and reasonable compensation. Saenz v. Fid. & Guar. Ins. Underwriters, 925 S.W.2d 607, 614 (Tex. 1996). Courts should Aclosely scrutinize@ awards of mental anguish damages. Giles, 950 S.W.2d at 54.
2. The facts showing mental anguish.
Morris testified that the day after his surgery he learned that TMI disputed his claim and would not pay any of his bills. He testified that he was extremely scared and worried because he knew he could not pay the medical bills. Only a few days later he learned he had a potentially life-threatening staph infection at the incision site. He returned to the hospital but was told to Aget out@ because he had no coverage. However, Dr. Neblett found another doctor to donate his time and treat him. To help him recover from the staph infection, Morris said the hospital put him in a special room. All the time he was there his constant worry was not only whether he would get better and if was going to survive the infection, but how he would pay for the room and the medicine they were Apumping through him.@
Morris further testified that when he was discharged for the staph infection, because he had no coverage, he received no follow-up care. He continued to be hooked up to an I.V.; only once did a nurse come to check on him and show them how to hook up the I.V. Asked how it felt to go through all of this, Morris testified, AIt makes you sick. Makes you sick to your stomach.@ He said he felt as though the world was crashing down on him.
Then, to worsen matters, Morris began receiving past-due notices from his medical providers, complaining that he had not paid his bills. At least several providers threatened to turn his unpaid bills over to a credit bureau. He testified that his credit rating dropped. This was significant to him because he was a newlywed and wanted to be the man of the house, to make a living, and to provide for his family. Instead, he was faced with a stack of bills he could not pay. Morris had always had an excellent credit reputation and was proud of this fact. He said it was demeaning to go to Lowes and be turned down for credit for a $500 washing machine. AIt=s pretty embarrassing. Anyone can go get a washing machine except me.@ In addition, because his credit was bad, he also could not be listed on the mortgage for his family home. Only his wife was listed. He said this made him feel like Aa nothing.@
When asked at trial what he thinks about TMI=s actions, he said it A[f]eels like somebody rips your heart out a lot of times and jumps up and down on it.@ He said he wakes up in the middle of the night and thinks about TMI=s actions. And, as of the time of trial, he had not gotten over what TMI did.
Morris=s wife also testified about the emotional toll on Morris of TMI=s decision to dispute coverage, to refuse to pay his bills, and to refuse to settle. She said Morris was Aa basket case@ when the hospital told them he had no coverage and it could not treat him. When Morris learned that his medical bills would not be paid, it hurt his pride. But more than that, the long-term effect was that he felt Auseless,@ Aworthless,@ and Adegraded@ because he could not take care of his new family. As of the time of trial, she said Morris was Aa miserable human being.@
A close friend of Morris and his wife testified that since TMI disputed his claim, Morris was Akeyed up, tense, not happy.@ She said he is Anot the same person.@ A[H]e used to be more fun-loving and easygoing and happy all the time and always felt good.@ Now, A[h]e=s not happy@ and A[s]omething has just totally broke[n] him down.@
3. This evidence is legally sufficient to support a finding of mental anguish.
This evidence we have summarized is legally sufficient to support an award for mental anguish damages. In fact, we find this testimony similar to the evidence presented in Bentley v. Bunton, in which the Texas Supreme Court found sufficient evidence to support an award of mental anguish damages. 94 S.W.3d 561, 575B76, 604 (Tex. 2002). In Bentley, a district court judge sued a number of people connected with a public access television show hosted by Bunton. Bunton repeatedly accused Bentley of being corrupt, and, in fact, accused Bentley of being the most corrupt public official in the area. Bunton mentioned specific proof he had of Bentley=s corruption, and on one occasion accused Bentley of acting criminally. Id. at 568B71. The Court explained:
The record leaves no doubt that Bentley suffered mental anguish as a result of Bunton=s and Gates=s statements. Bentley testified that the ordeal had cost him time, deprived him of sleep, caused him embarrassment in the community in which he had spent almost all of his life, disrupted his family, and distressed his children at school. The experience, he said, was the worst of his life. Friends testified that he had been depressed, that his honor and integrity had been impugned, that his family had suffered, too, adding to his own distress, and that he would never be the same. Much of Bentley=s anxiety was caused by Bunton=s relentlessness in accusing him of corruption.
Id. at 606B07. Like Bentley, Morris presented some evidence that he suffered a high degree of mental anguish that substantially intruded into his daily routine. See id.; see also Colonial County Mut. Ins. Co. v. Valdez, 30 S.W.3d 514, 526 (Tex. App.CCorpus Christi 2000, no pet.) (holding that evidence was sufficient to support $20,000 mental anguish award where plaintiff felt deceived, Avery mad,@ and powerless, and suffered high blood pressure and sleeping disorders); Tex. Animal Health Comm=n v. Garza, 27 S.W.3d 54, 62B63 (Tex. App.CSan Antonio 2000, pet. denied) (holding that evidence of mental anguish was sufficient where plaintiff Ahad changed,@ was Airritable, depressed, and under tremendous stress,@ had physical symptoms, and felt like Aless of a man@ because he as not providing for his family); Tex. Farmers Ins. Co. v. Cameron, 24 S.W.3d 386, 395 (Tex. App.CDallas 2000, pet. denied) (holding evidence of mental anguish sufficient where plaintiff Afelt devastated,@ could not sleep, and Areduced dramatically her participation in church activities@).
4. TMI=s reasons for why the evidence is legally insufficient are unconvincing.
TMI claims that we cannot consider any evidence of vexation or worry caused by the staph infection, and specifically, that we cannot consider his testimony that he lost thirty pounds while on an I.V. It further argues that any testimony that he endured physical pain, suffered physical limitations because of his back, and could have died from the post-operative infection is irrelevant to mental anguish damages, because these problems are directly related to his workplace injury. TMI cites us to Aranda v. Insurance Co. of North America, 748 S.W.2d at 214.
We need not reach this issue because we have considered none of this testimony in assessing the adequacy of the mental anguish testimony. We have considered only testimony recalling the impact on his life and on his family=s life of TMI=s refusal to pay his bills. Thus, when we considered the staph infection, we considered only his testimony that he was afraid it might not get treated and his constant worry while on I.V. medication as to how he would be able to pay for the medication. Although we mentioned his underlying fear that he might not recover from the infection, that has not factored into our conclusion.
TMI urges us not to consider the bills that providers sent because Morris knew that his health care providers were not supposed to send him any bills. Yet, he received them still. And, one or more providers stated they would refer the bills to credit bureaus. But more than this, the amount of the bills themselves contributed to Morris=s fears and worry. At trial, he reviewed only some of the bills, which totaled $12,431. His great concern that he would not be able to pay the bills contributed to his mental anguish.
Finally, TMI points out that Morris did not seek treatment for any mental or emotional problem, and that he represented to doctors on health questionnaires that he had no mental or emotional problems. We have not found a case holding that mental anguish remains unproved if a claimant fails to show treatment by a doctor for a mental or emotional problem, and TMI has cited us to none. More importantly, this same sort of testimony was noticeably absent in the Bentley opinion. And there, as we have stated, the Texas Supreme Court found the testimony sufficient to support mental anguish damages. But, to respond directly to TMI=s claim, both Bentley and this case contain evidence of emotional and mental toll that are evident without the interpretation of a doctor. Among other evidence in Bentley, the record contained testimony that Bentley was Asad@ or Adowncast@ and would never be the same as he used to be. See Bentley, 94 S.W.3d at 576B77. Here, among other evidence, we have testimony that Morris was Aa miserable human being,@ that he was Anot happy,@ that he felt Aworthless,@ and that A[s]omething has just totally broke[n] him down.@ So, although neither case has testimony that either man sought the help of a doctor, both cases reveal men who paid an emotional or mental price and whose countenances revealed the price paid.
We overrule TMI=s fourth issue and hold that the evidence supports mental anguish damages in the amount of $50,000.
B. Evidence of Damages to Credit Reputation
The judgment also awarded Morris $75,000 for loss of credit reputation, including $25,000 for damages sustained in the past and $50,000 for damages sustained in the future. Texas allows awards for damage to credit reputation. In St. Paul Surplus Lines Insurance Co. v. Dal-Worth Tank Co., the Texas Supreme court explained, A[t]o prove that credit rating is harmed is to prove nominal damages; not until a loan is actually denied or a higher interest rate charged is there proof of actual damages.@ 974 S.W.2d 51, 53 (Tex. 1998). But even more importantly, the Court added this language in explaining what type of proof is necessary to show actual damage: AThere must be a showing that such inability resulted in injury and proof of the amount of injury.@ Id. (emphasis added).
Thus, in Dal-Worth Tank, the Court held that no evidence of damage to credit reputation existed because there was no evidence of a real injury and no evidence of any specific increase in its cost of doing business. Id. For example, before its credit reputation was allegedly damaged, Dal-Worth Tank had a large line of credit that was greatly diminished, but Dal-Worth Tank introduced no evidence that the decline injured it in any way because it did not need to use the line of credit. Id.
Likewise, in Castañeda, the plaintiff testified that she Ahad applied for credit cards and was turned down.@ Castañeda, 988 S.W.2d at 199. The Texas Supreme Court held that this evidence was legally insufficient. Id. It reiterated, Athere must be a showing that the inability to obtain a loan resulted in injury and proof of the amount of that injury.=@ Id. (quoting Dal-Worth Tank Co., 974 S.W.2d at 53).
Loss to credit reputation is a form of economic, or financial, damage. For this reason, it makes sense to require more precision in the proof of damage. That, it seems, is the reasoning behind Dal-Worth Tank Co. and Castañeda. We understand both of those decisions to instruct that a plaintiff cannot recover for damage to credit reputation unless she shows that she suffered identifiable, measurable damages. Castañeda, 988 S.W.2d at 199; Dal-Worth Tank Co., 974 S.W.2d at 54.
We turn now to Morris=s proof. As did the plaintiffs in Dal-Worth Tank Co. and Castaneda, Morris failed to prove any amount of injury. Morris testified that he prided himself on having a sterling credit reputation. After TMI=s actions, his credit rating Adefinitely went down@ and he was unable to finance a new washing machine from Lowe=s because of his poor credit rating. He also testified that he was unable to secure a mortgage on his home, which had to be financed solely in his wife=s name. However, at no point did Morris, or anyone else such as an expert, define the injury he sustained when he could not take out a loan on a washing machine at Lowe=s. In addition, neither Morris, nor any witness in his behalf, put a dollar amount on the injury he sustained because of his inability to obtain a loan for a washing machine or to have his name on his home mortgage. In short, he proved no identifiable, measurable damages.
For these reasons, we hold that the evidence is legally insufficient to support an award for damage to credit reputation and sustain TMI=s third issue attacking that award of damages in the judgment.
IV. Jury Instructions
In its fifth issue, TMI contends that the trial court erred in instructing the jury in Question No. 2 on Aeight different theories of liability.@ TMI asserts that, assuming there is evidence to support one or more of these theories, there is not enough evidence to support all the submitted theories. Therefore, according to TMI, the trial court erroneously submitted a jury question containing both valid and invalid theories of liability in contravention of Crown Life Insurance Co. v. Casteel, 22 S.W.3d at 388 (holding it was error to submit a broad-form liability question incorporating both valid and invalid theories of liability).
Under Casteel, when the jury charge is drafted so that the jury may have based its finding of liability Asolely on one or more . . . erroneously submitted theories . . . . it is impossible for us to conclude that the jury=s answer was not based on one of the improperly submitted theories.@ Id. at 389. AHowever, when questions are submitted in a manner that allows the appellate court to determine that the jury=s verdict was actually based on a valid liability theory, the error may be harmless.@ Id. (citing City of Brownsville v. Alvarado, 897 S.W.2d 750, 752 (Tex. 1995) (ASubmission of an improper jury question can be harmless error if the jury=s answers to other questions render the improper question immaterial.@); Boatland of Houston, Inc., v. Bailey, 609 S.W.2d 743, 749B50 (Tex. 1980) (holding that the potentially improper submission of defensive issues was harmless error when the jury also found for the defendant on independent grounds)). Thus, Casteel does not require reversal when an appellate court may be Areasonably certain that the jury was not significantly influenced by issues erroneously submitted to it.@ Romero v. KPH Consolidation, Inc., 166 S.W.3d 212, 227B28 (Tex. 2005).
For purposes of our review, we need not decide if Question No. 2 included eight theories of liability. However one views it, we are reasonably certain that the jury answered Ayes@ to one of the two specific sub-parts of Question 2Cboth of which have evidence to support themCand for this reason, we need not look further. We explain below.
The first question presented to the jury asked it to decide if TMI breached its duty of good faith and fair dealing in one of two ways:
(1) denying a claim when it knew or should have known that it was reasonably clear that the claim was covered, or
(2) failing to reasonably investigate a covered claim.
The jury answered Ayes@ to this question, finding that TMI violated one or both of these duties.
Next, Question No. 2 required the jury to decide if TMI engaged in any of a list of unfair or deceptive acts or practices, which were subdivided into unfair settlement practices and misrepresentations. Two of the acts listed under unfair settlement practices are almost verbatim the two acts the jury was asked to consider in Question No 1. Question No. 2 listed the acts this way:
b. failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of a claim with respect to which the insurer=s liability has become clear; or
d. refusing to pay a claim without conducting a reasonable investigation with respect to the claim.
Having just spent some amount of time considering essentially these same two factors in Question No. 1, and having decided that TMI violated one or both of them, we find it extremely unlikely that the jurors would arrive at Question No. 2 and fail to recognize that sub-parts Ab@ and Ad@ listed above were the same questions they answered in Question No. 1. And, having answered one or both of them affirmatively in Question No. 1, we find it equally unlikely that the jury would not give the same answer in Question No. 2. Thus, if the jury found in Question No. 1 that both acts were committed, we are reasonably certain that the jury found the same acts were committed in Question No. 2. Likewise, if the jury found that only one of the acts in Question No. 1 was committed, we are reasonably certain that the jury would find in Question No. 2 that the very same act was committed. Earlier in this opinion we considered both of these actsCthe failure to reasonably settle when liability has become clear and the failure to pay a claim without conducting a reasonable investigationCand found that legally sufficient evidence supported a jury finding of Ayes@ to both of these acts. The same evidence supports a Ayes@ answer in both Question Nos. 1 and 2.
The jury also may have thought other unfair acts were committed, but we need not consider whether any of the other six acts listed in Question No. 2 were erroneously submitted or whether the jury found that any of the other six acts were committed. We need not do this because we know evidence supports the two acts listed in Question No. 1 and that evidence supports the same two acts in Question No. 2. And, we are reasonably certain that whatever act the jury found was committed in Question No. 1, it found was committed in Question No. 2. For this reason, we find no Casteel error, and we overrule TMI=s fourth issue. See Romero, 166 S.W.3d at 227B28; see also Dillard v. Tex. Elec. Co-op., 157 S.W.3d 429, 434 (Tex. 2005) (explaining that A[u]nder broad-form submission rules, jurors need not agree on every detail of what occurred so long as they agree on the legally relevant result@).
We overrule TMI=s fifth issue.
V. Cause of Action for Breach of Duty of Good Faith and Fair Dealing Against Workers= Compensation Carrier
In its sixth issue, TMI contends that the duty of good faith and fair dealing imposed on workers= compensation carriers in Aranda v. Insurance Co. of North America, 748 S.W.2d at 210, should be re-examined and overruled based on the reasoning of American Motorists Insurance Co. v. Fodge, 63 S.W.3d 801 (Tex. 2001). In Fodge, the Court held that if the TWCC determines that benefits are not owed, the insurer cannot be liable for bad faith Abecause of the detailed statutory regulation of the processes of making and resolving such claims.@ Id. at 804. According to TMI, the Texas Supreme Court would, in a case like this one, extend Fodge to hold that there can be no liability for bad faith in the context of a workers= compensation claim under any circumstancesCi.e., even when the underlying claim is coveredCbecause the compensation process is so heavily regulated that imposing a duty of good faith and fair dealing is unnecessary to protect injured workers.
However, it is not the function of a court of appeals to abrogate or modify established precedent from the Supreme Court of Texas. Lubbock County v. Trammel=s Lubbock Bail Bonds, 80 S.W.3d 580, 585 (Tex. 2002). That function lies solely with the Texas Supreme Court. Id.; see also Petco Animal Supplies, Inc. v. Schuster, 144 S.W.3d 554, 565 (Tex. App.CAustin 2004, no pet.) (AAs an intermediate appellate court, we are not free to mold Texas law as we see fit but must instead follow the precedents of the Texas Supreme Court unless and until the high court overrules them or the Texas Legislature supersedes them by statute.@).
We decline to do what TMI asks. First, we are not presented with a circumstance in which the plaintiff was not entitled to benefits as in Fodge. Here, the TWCC ruled that Morris=s claim was covered, and it ordered TMI to pay medical benefits to him. Second, the Fodge court could have overruled Aranda if it thought that was necessary. It chose not to overrule Aranda, and we have no authority to do so.
So, we affirm the trial court=s judgment in the alternative that Morris may recover his damages under the common law for breach of the duty of good faith and fair dealing, and we overrule TMI=s sixth issue.
Analysis of Morris=s Cross-Appeal
The jury awarded Morris, among other things, additional damages of $500,000 because it found that TMI acted knowingly. Morris moved for the trial court to enter judgment on the jury=s verdict, but asked the trial court to reduce the jury=s award of additional damages to $375,000, to reflect an amount that was three times the actual damages of $125,000 the jury awarded Morris. Morris argued that Insurance Code section 541.152 authorizes the recovery of actual damages plus three times actual damages, for a total of four times actual damages. TMI filed a motion to disregard the jury verdict and for JNOV, arguing, among other things, that quadrupling the actual damages is not authorized by the statute and is contrary to judicial precedent. The trial court agreed with TMI and, in its judgment, awarded Morris $250,000 in additional damages, two times the amount of actual damages awarded.
In one issue, Morris contends that, when construed according to the rules of grammar and common usage, section 541.152(b) of the Texas Insurance Code permits a plaintiff to recover statutory damages of three times actual damages, in addition to actual damages, for a knowing violation of the Insurance Code. Statutory construction is a question of law, which we review de novo. See Shumake, 199 S.W.3d at 284.
Section 541.152 provides as follows:
(a) A plaintiff who prevails in an action under this subchapter may obtain:
(1) the amount of actual damages, plus court costs and reasonable and necessary attorney's fees;
(2) an order enjoining the act or failure to act complained of; or
(3) any other relief the court determines is proper.
(b) On a finding by the trier of fact that the defendant knowingly committed the act complained of, the trier of fact may award an amount not to exceed three times the amount of actual damages.
Tex. Ins. Code ' 541.152(a)B(b).
Morris argues that, because subsection (b) is separate from subsection (a), which provides for actual damages, costs and attorney=s fees, it evidences the Legislature=s intent to allow the recovery of additional damages for a knowing violation in addition to actual damages. Morris also argues that the absence of disjunctive language between subsections (a) and (b) indicates that Athe claimant may independently invoke the remedies contained@ in these two subsections. Because of the structure of the current statute, Morris contends that it cannot be analogized to prior versions contained in former Insurance Code article 21.21, which had been interpretedCcontrary to Morris=s proposed interpretationCto limit a plaintiff=s recovery to three times actual damages, rather than actual damages plus three times actual damages. See Allstate Indem. Co. v. Hyman, No. 06-05-00064-CV, 2006 WL 694014, at *10B12 (Tex. App.CTexarkana Mar. 21, 2006), judm=t vacated by agr., 2006 WL 1229089 (Tex. App.CTexarkana May 9, 2006) (mem. op.) (holding that former article 21.21 limits a plaintiff=s total recovery to three times actual damages); Liberty Mut. Fire Ins. Co. v. McDonough, 734 S.W.2d 66, 71 (Tex. App.CEl Paso 1987, no writ) (holding that treble damages are calculated by making the total award three times the actual damages found by the jury).
In essence, Morris argues that we should read the words Ain addition@ into section 541.152 between subsections (a) and (b). However, such a result is contrary to the history of the damages provision. In the 1985 version of the Insurance Code, article 21.21, section 16(b) provided as follows:
(b) In a suit filed under this section, any plaintiff who prevails may obtain:
(1) the amount of actual damages plus court costs and reasonable and necessary attorneys= fees. If the trier of fact finds that the defendant knowingly committed the acts complained of, the court shall award, in addition, two times the amount of actual damages; or
(2) an order enjoining such acts or failure to act; or
(3) any other relief which the court deems proper.
Act of Mar. 19, 1985, 69th Leg., R.S., ch. 22, ' 3, 1985 Tex. Gen. Laws 395 (repealed). In 1995, section 16(b) was amended to change the reference to an additional two times actual damages to Anot more than three times the amount of actual damages@:
In a suit filed under this section, any plaintiff who prevails may obtain . . . the amount of actual damages plus court costs and reasonable and necessary attorneys= fees. If the trier of fact finds that the defendant knowingly committed the acts complained of, the trier of fact may award not more than three times the amount of actual damages . . . .
Act of May 19, 1995, 74th Leg., R.S., ch. 414, ' 13, 1995 Tex. Gen. Laws 2988, 3000 (repealed 2003) (formerly Tex. Ins. Code art. 21.21, ' 16(b)(1)) (emphasis added).
The current section 541.152, enacted in 2003, simply places language substantively identical to the emphasized language in a separate subsection (b). By that action, we cannot say that the Legislature intended to significantly increase the upper limit of the relief available for a knowing violation of the Insurance Code. Indeed, the Legislature made clear that the 2003 amendments were intended merely to recodify the existing law without substantive change. See H.B. No. 2922, 2003 Tex. Sess. Law Serv. ' 27 (AThis Act is intended as a recodification only, and no substantive change in law is intended by this Act.@). Further, if the Legislature intended to mean that the remedy available in subsection (b) was Ain addition@ to that provided in subsection (a), it could have used those words, as it did in the 1985 version, in which it expressly stated that two times actual damages were available Ain addition@ to the actual damages found when the trier of fact finds that the defendant acted knowingly. But, the Legislature did not use those words; it merely separated the sentences into separate sections. Thus, we do not construe the provision to expressly provide that, in addition to actual damages, three times actual damages may be awarded for a knowing violation. For the same reason, we do not view the absence of the disjunctive Aor@ between the sections as indicating that the Legislature intended to increase the damages available for a knowing violation. Therefore, we reject Morris=s statutory construction argument based on the Legislature=s placement of the remedies available into separate sections.
Morris also argues that his construction of section 541.152 is consistent with the Legislature=s modification of the DTPA damages provision to provide that a claimant may recover economic damages and, in addition, three times economic damages if the defendant=s conduct was knowing. Section 17.50(b)(1) of the DTPA, on which Morris relies, provides as follows:
(b) In a suit filed under this section, each consumer who prevails may obtain:
(1) the amount of economic damages found by the trier of fact. If the trier of fact finds that the conduct of the defendant was committed knowingly, the consumer may also recover damages for mental anguish, as found by the trier of fact, and the trier of fact may award not more than three times the amount of economic damages; or if the trier of fact finds the conduct was committed intentionally, the consumer may recover damages for mental anguish, as found by the trier of fact, and the trier of fact may award not more than three times the amount of damages for mental anguish and economic damages . . . .
Tex. Bus. & Com. Code ' 17.50(b)(1). Morris argues that the Texas Supreme Court has confirmed his interpretation of this language in Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299 (Tex. 2006), and therefore the same reasoning should apply to the Insurance Code. Morris relies on the following statements from Chapa:
$ AFor a DTPA violation, [the plaintiff] could recover economic damages, mental anguish, and attorney=s fees, but not additional damages beyond $21,639 (three times her economic damages).@ Id. at 304 (emphasis added).
$ AFor acts committed intentionally, a consumer may recover additional damages up to three times the amount of economic and mental anguish damages combined . . . .@ Id. at 304 n.6.
$ AUnder either fraud or the DTPA, Chapa is entitled to $7,213 in economic damages and $21,639, in mental anguish. . . . At the trial level, the most Chapa could recover under the DTPA would be additional damages of $21,639 (three times her economic damages) plus attorney=s fees of something less than $20,000 (depending on the new verdict). If the court of appeals= reassessment of exemplary damages for fraud exceeds this amount, Chapa would obviously be better off electing that recovery . . . .@ Id. at 314B15.
However, the statements Morris relies on in Chapa are dicta. Neither party presented any issue concerning the method by which additional damages were to be calculated under the DTPA. See id. at 307 (noting that the court of appeals= opinion and the parties= briefs address only whether the exemplary damages were properly awarded based on fraud).
Additionally, the language Morris cites in Chapa does not apply because Chapa was discussing section 17.50(b)(1) of the DTPA, not section 541.152(b) of the Insurance Code. The DTPA provision is not analogous because it provides for both economic and additional damages within a single subsection, contrary to the separate subsections in the Insurance Code provision that are central to the argument Morris advances. Had the Legislature intended the two provisions to be construed similarly, it could have drafted both similarly, but it did not. Further, the language is somewhat different, expressly providing that a consumer, in addition to economic damages, Amay also recover damages for mental anguish . . . and the trier of fact may award not more than three times the amount of economic damages . . . .@ The inclusion of the Amay also recover@ language, which does not appear in section 541.152(b) of the Insurance Code, expressly indicates that additional damages are authorized for a knowing violation of the DTPA, and so appears more favorable to a plaintiff than the language in section 541.152(b). Had similar language been included in section 541.152(b), or had the language Morris contends should be read into itCthat the trier of fact may award three times actual damages Ain addition@ to the award of actual damagesCour conclusion may have been different.
Finally, we note that Morris cites no case law holding that a plaintiff may obtain additional damages of three times actual damages under Insurance Code section 541.142(b), and we have found none. Therefore, based on the provision=s statutory history and prior precedent, we decline to adopt Morris=s interpretation of section 541.142(b).
We overrule Morris=s cross-appeal.
Having considered the issues raised in TMI=s appeal and Morris=s cross-appeal, we find there is no evidence to support that portion of the judgment awarding Morris damages for loss of credit reputation in the past and in the future. We therefore modify the judgment to delete that portion of the judgment awarding Morris damages for his loss of credit reputation. We affirm the remainder of judgment.
/s/ Wanda McKee Fowler
Judgment rendered and Opinion filed August 26, 2008.
Panel consists of Justices Anderson, Fowler, and Frost.
 Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378 (Tex. 2001).
 The Texas Workers= Compensation Commission is now known as the Texas Department of Insurance, Division of Workers= Compensation. See Tex. Lab. Code ' 402.001(b). We will refer to that authority as it existed during the period relevant to this case.
 Morris also sued Joy Rodgers, TMI=s adjuster on his claim, but she is not a party to this appeal.
 See Tex. Ins. Code ' 541.061(1).
 See id. ' 541.061(2).
 See id. ' 541.061(3).
 See id. ' 541.061(5).
 See id. ' 541.060(a)(1).
 See id. ' 541.060(a)(2).
 See id. ' 541.060(a)(3).
 See id. ' 541.060(a)(7).
 The four justices in the plurality as well as the four concurring justices agreed on the standard. See 950 S.W.2d 48, 55-56 (Tex. 1997) (plurality op.); id. at 69 (Hecht, J., concurring).
 Five of the justices in Giles stated or suggested in concurrences that the change in the formulation of the standard of liability for bad faith was merely semantic and would have no practical effect on the outcome of cases. Giles, 950 S.W.2d at 59 (Hecht, Phillips, Gonzalez & Owen, J.J., concurring); id. at 80 (Enoch, J., concurring).
 In support of its argument, Morris cites Maynard v. State Farm Lloyds, No. Civ. A. 3:00-CV2428M, 2002 WL 1461923, at *4 (N.D. Tex. July 2, 2002), in which the court appears to limit the application of the Areasonably clear@ standard only to the plaintiff=s statutory claim that the insurer failed to settle a claim when its liability had become reasonably clear, and not the statutory claim that the insurer failed to reasonably investigate. See id. at n.5. However, the court does not discuss Casteñeda in its brief analysis, and therefore we do not find it persuasive.
 TMI was then known as the Texas Workers= Compensation Insurance Fund.
 After reviewing test results, Dr Neblett determined that Morris was experiencing a Alarge left disc herniation at the L4-5 level@ and Achanges of concern at the L5-S1 level.@ The L4-5 area of his spine was the same area injured in the June 12, 2000 incident.
 This is also known as a AForm TWCC-21" and is filed with the TWCC.
 On cross-examination, when Mitchell was asked whether he told Rodgers he was at full duty without any medical problems, he stated, AI guess I did. It says it right there.@ However, he then qualified his comment, testifying, AI can=t tell you that I said it because I don=t think he was at full duty without any problems@ and Ahe was at full duty as much as his capacity allowed.@
 Morris=s expert testified that Aradiculopathy@ indicates neurological involvement. Waldrop=s reference to radiculopathy factored into the TWCC decision that Morris was entitled to benefits.
 We understand ADOI@ to be a reference to the date of Morris=s injury, June 12, 2000.
 Morris=s expert testified that a conscientious adjuster would have requested medical records long before this point in time.
 The benefit review officer=s recommendation included the following notation: A[w]ithout the entry of 11/21/01 from Dr. Waldrop=s office, noting that [Morris] had problems at L5-S1 with radiculopathy, a favorable recommendation would not have been made for the claimant because of the gap in the medical records thereafter (10 months gap). However, the symptoms were noted before the gap in the medical records and other incidents noted in Dr. King=s records cannot be deemed at this point to have resulted in an intervening injury to [Morris=s] lower back.@
 In relevant part, the ABackground Information@ section of the decision provided as follows:
The Claimant=s testimony was credible, and it and the medical evidence established that the herniations at levels L4-5 and L5-S1 of his lumbosacral spine naturally resulted from his compensable June 12, 2000 injury. The medical evidence, while allegedly somewhat incomplete, does show that the Claimant was complaining of neurological symptoms and radiculopathy prior to a significant gap in his medical records. The report of the Carrier=s doctor, Dr. Stephen DeYoung, also demonstrates that it is likely, if the Claimant had no prior back problems/injuries, and if he has had low back complaints since June 12, 2000, that his current herniations are causally connected to the June 12, 2000 injury. The Claimant=s testimony demonstrated that he had no back problems before June 12, 2000 and he has had difficulty with his low back since June 12, 2000. He met his burden of proof on the issue.
 In fact, TMI did not know about the 1998 injury until the parties were preparing for the bad faith trial, so this was not a reason for its earlier denial.
 TMI also asserts that, by submitting a jury question on fraud, the trial court effectively found that TMI Aproved a prima facie case of fraud.@ See Tex. R. Civ. P. 278 (AThe court shall submit the questions . . . which are raised by the written pleadings and the evidence.@). Consequently, TMI urges, the evidence cannot simultaneously support TMI=s claim that Morris committed fraud and Morris=s claim that TMI had no reasonable basis to deny or delay paying the claim. But, the mere fact that a trial judge submitted a fraud question to the jury does not prove that there must have been some evidence of fraud; indeed, the jury found that Morris did not commit fraud, and TMI has not challenged this finding. At trial, Morris testified that he did not previously reveal the 1998 back strain because he recovered from it and so did not consider it an Ainjury.@ Similarly, Bill Mitchell testified that initially he did not even remember Morris being injured in 1998, and he explained that, in his view, a back strain is A[j]ust something that happens@ and A[y]ou get over it and go on.@ Morris was extensively cross-examined concerning his credibility, and the jury was free to accept his explanation and find against TMI on its fraud claim. Accordingly, no circumstance of inconsistent, simultaneous proof of fraud and bad faith exists.
 The opinion is unclear whether the court meant that denial of a credit card application does not qualify as a denial of a loan or whether Castañeda failed to prove exactly how she was injured by being turned down for credit cards. Id. However, the important point is that a plaintiff must have identifiable, measurable damages that are shown to the jury. Id.