Texas Supreme Court says exhaustion of administrative remedies required in order to sue on settlement


This is a Texas Supreme Court opinion which centers on the lack of jurisdiction for failure to exhaust administrative remedies.  The underlying facts are related to a worker’s compensation claim, but the case does not really affect current claims since the Court was interpreting the statute as it existed in 1988.   However, the significant premise of this case is that even though the City entered into a settlement agreement in 1988, in order to bring suit for its breach, Plaintiff Rhule was still required to exhaust his administrative remedies as he should have done at the time of the settlement (i.e. submit his claim to the Industrial Accident Board [now the Texas Workforce Commission] prior to filing suit).  This holding can affect any claim which has an exhaustion of administrative remedies component.

Rhule was an injured City of Houston firefighter injured on the job. The City entered into a settlement agreement for a sum plus “lifetime open reasonable and necessary medical [expenses]”.  The City paid until 2004 when it determined his current medications and treatment were not related to the 1988 injury.  Rhule sued for breach of the settlement agreement, won at the trial court, which the court of appeals affirmed.

The Court’s analysis turns on whether the Commission has exclusive jurisdiction over Rhule’s claim. The Worker’s Compensation Act at the time had a provision noting that any dispute over a settlement or judgment to pay must be submitted to the Board (i.e. now the Commission).  The Court held this language granted the Commission exclusive jurisdiction over the claim and since Rhule did not submit the breach to the current Commission, the trial court was without jurisdiction to hear the case.  The judgment is reversed and rendered.

If you would like to read this opinion click here.

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