Commercial Casualty Ins. Co. v. Hilton (55 S.W.2d 120, 1932)

BLAIR, J.

Appellee filed this suit as an appeal from the action of the Industrial Accident Board, refusing- to set aside a compromise settlement of his compensation claim, which the board had approved, but which was alleged to have been obtained by mistake or fraud as to the condition of appellee’s injuries when made; and refusing to award appellee such compensation as he might show himself entitled to receive. The trial resulted in setting aside the compromise agreement for fraud, and in a lump judgment for $2,545.57 as compensation, and $5,000 for medical and hospital services in favor of appellee.

The compromise settlement of the claim for compensation was executed and approved by the board in the manner provided by section 12 of article 8307. The order of the board refusing to set aside this agreement and the order approving it for fraud, and to reopen the case and award appellee the compensation to which he showed himself entitled to receive, omitting formal parts, reads as follows:

“The application of the claimant herein to reopen this case and set aside the order of the Board made and entered June 23, 1931, approving a compromise settlement agreement which motion was received and filed in this office July 29, 1931 (see page 74) has been duly considered by the Board.

“Under the decisions of the Supreme Gourt in the eases of Lumbermen’s Reciprocal Association v. Henderson [15 S.W.(2d) 565], and Lumbermen’s Reciprocal Association v. Day ! 3 7 S.W.(2d) 1043] we do not think we have jurisdiction to pass upon questions raised in said application, and for that reason we have today declined to set the application down for hearing.”

Appellee filed timely notice of intention not to abide by the order refusing to set aside the fraudulent compromise agreement, and refusing to reopen his case and award such compensation as he might show himself entitled to receive;' and timely filed this suit as an appeal from such action of the board, as provided in the Workmen’s Compensation Act, the petition alleging appellee’s injuries to be the same as stated in his application to the board for compensation; and alleging fully the facts showing mistake or fraud inducing the settlement agreement.

Appellant admits that the courts acquired jurisdiction to pass upon the question of whether the compromise settlement was induced by mistake or fraud; but contends that the courts acquired no jurisdiction to adjudicate appellee’s claim for compensation and for medical and hospital services, (a) because the Industrial Accident Board had no power or authority to pass upon the mistake or fraud issue, it being judicial; and that no award could be made by the hoard until the fraud issue had been determined by a court of competent jurisdiction in favor of appellee; and (b) because the board, as shown by its above-quoted order, had not exercised its jurisdiction to hear and determine such matters upon their merits; and had made no final appealable award thereon, citing the following cases as! supporting these contentions: Lumbermen’s Reciprocal Ass'n v. Wilmoth et al. (Tex. Com. App.) 12 S.W.(2d).972; Texas Employers’ Ins. Ass’n v. Hoelm (Tex. Civ. App.) 20 S.W.(2d) 263; Mingus v. Wadley, 115 Tex. 551, 285 S. W. 1084; Georgia Casualty Co. v. Campbell (Tex. Civ. App.) 266 S. W. 854; Lumberman’s Reciprocal Association v. Behnken, 112 Tex. 103, 246 S. W. 72, 28 A. L. R. 1402; Lumbermen’s Reciprocal Ass’n' v. Day (Tex. Com. App.) 17 S.W.(2d) 1043; Lumbermen’s Reciprocal Ass’n v. Henderson (Tex. Com. App.) 15 S.W.(2d) 565.

These contentions of appellant are not sustained. The last contention will be considered first. It is true that the jurisdiction .of courts under the Workmen’s Compensation Act attaches only by appeal from a final award or decision of the Industrial Accident Board, either awarding or refusing a claim for compensation or other relief authorized by the act. Lumberman’s Reciprocal’ Ass’n v. Behnken, supra; Mingus v. Wadley, supra; Jones v. Texas Indemnity Ins. Co. (Tex. Civ. App.) 15 S.W.(2d) 1077; Texas Indemnity Co. v. White (Tex. Civ. App.) 37 S.W.(2d) 277; section 12d of article 8306, as amended by Acts 1931, 42d Leg. c. 155, p. 260 (Vernon’s Ann. Civ. St. art. 8306, § 12d): and section 5 of article 8307, as amended by Acts 1931, 42d Leg. c. 224, p. 378 (Vernon’s Ann. Civ. St. art. 8307, § 5). The rule is also well settled that, where a claim for compensation is refused or denied for any reason by the board, and an appeal is taken, the courts acquire jurisdiction to determine all issues between the parties relating to the injury and compensation therefor, which includes all incidental claims resulting from the injury and allowed by the act, regardless of whether such had been asserted before the board. Lumberman’s Reciprocal Ass’n v. Behnken, supra; Ætna Life Ins. Co. v. Culvahouse (Tex. Civ. App.) 10 S.W.(2d) 803. And it has also been uniformly held that the Industrial Accident Board is an administrative body created for the purpose of administering the Workmen’s Compensation Laws in accordance with their provisions; that it has jurisdiction over the persons and subject-matter involved; and that in the performance of its duties it exercises administrative .and quasi judicial functions. Middleton v. Texas Power & Light Co., 108 Tex. 96, 185 S. W. 556; Vestal v. Texas Employers’ Ins. Ass’n (Tex. Com. App.) 285 S. W. 1011; Keller v. Texas Employers’ Ins. Ass’n (Tex. Civ. App.) 279 S. W. 1113; Southern Casualty Co. v. Todd (Tex. Com. App.) 29 S.W.(2d) 973; Texas Employers’ Ins. Ass’n v. Sewell (Tex. Civ. App.) 32 S.W.(2d) 262.

So in this case, if the board, in the exercise of its administrative and quasi judicial functions under the act, had the power or authority to review its previous order approving the compromise settlement agreement, ,and to set it aside or change or revoke it upon a showing that it had been procured by mistake or fraud, we think it manifest that the above-quoted order of the board, refusing to set aside the settlement agreement for .mistake or fraud, and refusing to consider ap-pellee’s claim for such compensation as he .might show himself entitled to receive, constituted a denial of the claim for compensation, giving the courts jurisdiction on this appeal. Southern Casualty Co. v. Todd (Tex. Com. App.) 29 S.W.(2d) 973; Texas Employers’ Ins. Ass’n v. Rodgers (Tex. Civ. App.) 281 S. W. 968 (writ of error dismissed). Nor ■can it be material whether the board refused to act because of the belief that it had no .authority to pass upon the question of mistake or fraud inducing the settlement agreement which it had theretofore approved. Whatever the reason for refusing appellee’s application for compensation, which the order recites the board had duly considered, the refusal to act effectively closed the door of relief to him; and was a denial of his pending claim for compensation. We therefore pass to a consideration of the question of whether the board, in the performance of its administrative and quasi judicial functions, had thq power or authority to review its previous order approving the settlement agreement in connection with the application of ap-pellee to set it aside for mistake or fraud; and to award appellee the compensation to which he might show himself entitled to receive.

In the recent ease of Estes v. Hartford Accident & Indemnity Co. (Tex. Civ. App.) 46 S.W.(2d) 413 (writ of error refused), it was held (a) that, since section 12 of article 8307 provided for the approval by the Accident Board of the compromise settlement of the claim for compensation, an order or award •of the board approving same had the force and effect of a judgment or an award of compensation; and (b) that, upon the issue being submitted within the compensation period, the settlement agreement approved by the board had been procured by mistake or fraud, the board had the authority to revoke or change its previous order of compensation based upon the settlement agreement, and to award such compensation as the injured employee showed himself entitled to receive, by virtue of the provisions of section 12d of article 8306, as amended by Acts 1931, 42d Leg. c. 155, p. 260 (Vernon’s Ann. Civ. St. art. 8306, § 12d), authorizing the board “upon its own motion or upon the application of any person interested showing * ⅜ * mistake or fraud, the Board at any time within the compensation period, may review any award or order, ending, diminishing or increasing compensation previously awarded * * * or change or revoke its previous order.” We have examined the application forwrit of error in this case, and it, as well as all the courts passing upon the case, either assumed or specifically held that, the board, under authority of the above statutes, could set aside its previous order approving a compromise agreement induced by fraud. A similar holding was made in the case of Employers’ Ins. Ass’n v. Rodgers, supra. In the cases of United States Fidelity & Guaranty Co. v. Cooper (Tex. Civ. App.) 14 S.W.(2d) 342, 343; Id. (Com. App.) 29 S.W.(2d) 971; Id. (Com. App.) 33 S.W.(2d) 189; Maryland Casualty Co. v. Meyer (Tex. Civ. App.) 41 S.W.(2d) 291; Commercial Standard Ins. Co. v. Lowrie (Tex. Civ. App.) 49 S.W.(2d) 933, 937, and cases there cited, it was held in substance that, unless a claim for compensation is presented and acted upon by the board in connection with an application to set aside a compromise settlement for fraud, the courts have no jurisdiction to award compensation, but may only set aside the agreement. To the same effect is Lumbermen’s Reciprocal Ass’n v. Henderson (Tex. Com. App.) 15 S.W. (2d) 565. But these cases are not directly in point here, where the claim for compensation was filed and presented and considered by the board in connection with appellee’s application to set aside the order approving the compromise agreement; and the board’s order recites that, although it had considered the claim for compensation, it refused to pass upon same, because the Henderson Case, supra, and the case of Lumbermen’s Reciprocal Ass’n v. Day, supra, prohibited it from doing so. This last case has no application to the question, except to the extent that it holds a compromise agreement approved by the bo.ard may only be set aside for mistake or fraud inducing it. It is true that the court held in the I-Ienderson Case that the board had no authority or jurisdiction to pass upon the question of fraud, because such was a judicial question. This case, however, makes no reference to the aforementioned statutes authorizing the board, in its administration of the Compensation Act, to review its previous order or award and to set it aside upon a showing that it had been induced by mistake or fraud. Neither does this case, nor the cited case of Middleton y. Texas Power & Light Co., supra, attempt to pass upon the constitutionality of these statutes which clearly and explicitly confer this power upon the board. And since the board’s decision on such questions is only administrative, or at least merely quasi judicial, and not final, and the trial on appeal is de novo, we see no good reason why these statutes should be declared unconstitutional as being an attempt by the Legislature to confer judicial powers upon the Accident Board. We are not unmindful in this connection that the court in refusing the writ of error in the Estes Case, supra, could have done so upon the finding that the evidence did not establish the fraud as a matter of law, and that the court had jurisdiction of the fraud issue without regard to any action of the Accident Board thereon. But, in view of the fact that writs of error have been recently refused and dismissed in cases which refer to and predicate their decisions upon the authority of the statutes in question and the practice of the board in considering the case upon its merits at the time and in connection with an application to set aside a previous order approving a compromise agreement because induced by fraud, and to award or deny compensation as it determines the fraud issuQ, we have reached the conclusion that such practice is not prohibited, even if it has not modified to that extent the holding in the Henderson Case.

It may further be observed in this connection that the courts have also uniformly held that the board had the authority, and that it was its duty, to determine in the first instance before the jurisdiction of the courts would attach, such legal or judicial questions as to whether the employee was covered by the contract of insurance; or whether the employee had received ⅜ compensable injury in the course of his employment; or whether the employee was an independent contractor; or whether he was in law employed by an independent contractor rather than by the assured. These and many other judicial questions as far reaching as the question of mistake or fraud have been uniformly held to be proper questions for the board to determine as an initial step in the administration of the Workmen’s Compensation Laws. The piecemeal practice suggested by appellant of having a court of competent jurisdiction first pass upon the mistake or fraud issue, and if the employee be successful on the issue, then require him to again apply to the board for compensation, is not practicable. Such procedure can only lead to confusion and complications in the administration of the act. We therefore conclude in this ease that the board, in the performance of its initial duties and in the performance of its administrative and quasi judicial functions as required by the statutes, had not only the authority to set aside the compromise settlement for fraud, but to adjudicate at that time and in connection with appellee’s application or claim for such compensation ¿nd medical and hospital services as he might show himself entitled to receive; and that its refusal to act in that regard constituted a denial of appel-lee’s claim, and from which action he has correctly prosecuted this appeal.

By its second proposition appellant contends that, as á matter of law, the evidence showed no mistake or fraud imputable to it which might have induced appellee to execute the compromise agreement approved by the board. We do not sustain the contention.

Appellee alleged that both the settlement agreement and the order approving it were induced by mistake; or, if not by mistake, by the fraud of appellant, it being alleged that for a long period of time subsequent to his injury appellee was repeatedly examined by, and was continuously under the observation of, physicians employed by appellant, by reason of which fact the nature, extent, seriousness, and permanency of his injury and any disease resulting therefrom were peculiarly well known to appellant; that, shortly prior to.the settlement agreement and the approval thereof by the board, Dr. T. Y. Jennings was appointed by the board to examine appellee and to report his findings to the board; that Dr. Jennings reported that he was unable to find any complications that might be the result of appellee’s injuries, and that there was no evidence then existing that he had ever suffered any injuries; that said report was made recklessly and without knowing whether or not it was correct; and that appellant, its agents and employees, well knew that said report was incorrect, but knowingly and willfully concealed from appellee the inaccuracies and errors therein; that ap-pellee relied particularly upon the representations of Dr. Jennings, and that his report was true; and would not have made the agreement but for such report .to the effect that he had entirely recovered of his injuries; when in fact he was at the time and is now suffering from pulmonary abscesses,- hernia, shock, and jar to all parts of his body as the result of his injuries, which totally and permanently disabled him.

The. record shows that appellee was injured on January 29,1931, while in the course of his employment, by being struck with the “Johnson bar” of a wheeled scraper, which he was operating, and by the scraper passing over his body, resulting in cuts and bruises on his ear, head, shoulder, and chest; and, according to the first attending doctor, in a “fractured clavicle, fractured ribs and sternum.” A claim for compensation was duly filed with the Accident Board. Appellee was treated by appellant’s doctor, T. K. Turney, on January 29 and 30, and February 2, 5, and 15. Dr. Turney reported to appellant March 14 that “patient discharged as cured February 15, 1931, * * * patient able to resume work February 20, 1931.” Shortly before this last date, appellee moved from Robert Lee to Winters, and appellant’s doctor, N. J. Smith, treated him there on March 5, 11, 14, and 21; and on March 28 Dr. Smith reported to appellant that “patient pronounced able to resume work as of March 21, 1931. Patient discharged as cured on 3/21/31.” And further reported, as follows: “I removed old dressing and redressed patient. I consider patient has recovered from injury, but am of the opinion he is likely to be a Tubercular, though he can do some work. I think it best for you to dismiss his case, as I am doing.”

In March prior'to these reports, appellant had paid appellee two weekly payments of $7.7S each; but, after receiving these reports from its doctors, appellant made no further payments. Appellee’s condition gradually grew worse, and on April 21, 1931, his wife took him to the State Tuberculosis Sanitori-um for examination. Dr. Anderson examined him on that date, and found a pulmonary abscess on his left lung in an incipient state; and he told Mrs. Hilton to have the family doctor make necessary papers for his admission to the sanitoriuin. It is not shown from the record whether any