Accident Fund Insurance Company of America and Texas Cotton Ginners' Trust v. Texas Department of Insurance, Division of Workers' Compensation

Supreme Court of Texas
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No. 23-0273
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Accident Fund Insurance Company of America
and Texas Cotton Ginners’ Trust,
Petitioners,
v.
Texas Department of Insurance,
Division of Workers’ Compensation,
Respondent
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On Petition for Review from the
Court of Appeals for the Third District of Texas
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and

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No. 23-0950
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Accident Fund General Insurance Company,
Petitioner,
v.
Rodrigo Mendiola,
Respondent
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On Petition for Review from the
Court of Appeals for the Thirteenth District of Texas
═══════════════════════════════════════
JUSTICE YOUNG, joined by Justice Sullivan, concurring in the
denial of the petitions for review.

These two petitions—coincidentally filed by two subsidiaries of
the same parent company—are unrelated to each other but bear several
important similarities. Both raise significant statutory-interpretation
questions; both implicate (albeit in different ways) the proper role of
administrative agencies as compared to the courts; and both involve
issues that this Court may well need to address in a future case. But
the most important similarity is that neither petition offers the Court a
suitable vehicle to engage in such review now. I therefore concur in the
denial of both petitions for review.
The petition process is somewhat opaque, and it is understandably
frustrating to receive a denial without explanation—especially after
going through the process of full merits briefing, as with one of these
cases. But providing such an explanation is typically not feasible. For
one thing, the motivations of the members of the Court may well vary or
even conflict; for another, our docket is such that investing the time and
resources to explain every discretionary determination would undermine
the Court’s ability to discharge its duties without a concomitant benefit
to the bar or the lower courts. But a brief explanation as to these two
cases strikes me as warranted. I therefore write separately to explain
why the petitions raise significant legal issues and to emphasize that
denying review does not suggest that those issues are settled. To the
contrary, in a proper future case, I can readily imagine voting to grant
a petition.

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I
The petitions each challenge an aspect of Texas’s nearly billion-
dollar workers’ compensation program. I begin with the broader facial
challenge to a rule promulgated under that program, then turn to a
challenge to the specific award of benefits to a single claimant.
A
In No. 23-0273, the court of appeals rejected a facial challenge to a
rule promulgated by the Department of Insurance. Tex. Dep’t Ins. v.
Accident Fund Ins. Co., No. 03-21-00074-CV, 2023 WL 2286662 (Tex.
App.—Austin Feb. 28, 2023). The challenged rule is codified at 28 Tex.
Admin. Code § 130.102(d)(1)(D) and governs eligibility for “supplemental
income benefits,” which provide longer-term support to injured workers—
specifically, a fixed income for those with an impairment rating of 15%
or greater. See Tex. Lab. Code § 408.142(a)(1).
To protect the integrity of the benefits fund and preserve its
availability for the deserving, the legislature has established eligibility
criteria. As relevant here, the statute requires beneficiaries to provide
evidence of “active work search efforts documented by job applications
submitted by the recipient.” Id. § 408.1415(a)(3) (emphasis added). The
department’s implementing rule requires evidence only of “job
applications,” 28 Tex. Admin. Code § 130.102(d)(1)(D), without any
reference to their having been “submitted by the recipient” of the benefits,
see Tex. Lab. Code § 408.1415(a)(3).
Accident Fund argues that this inconsistency between the statute
and the rule is fatal to the latter. At first glance, it is easy to see why.
The statutory criteria, including the requirement to produce job

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applications, clearly limit the universe of potential beneficiaries. For any
limitation to matter, it presumably operates to exclude some applicants
from benefits that they would receive if the limit did not exist. Applied
here, the statute denies benefits to applicants who meet every other
requirement but who cannot produce job applications demonstrating
their active search for work. Accident Fund argues that by removing the
requirement that applications be “submitted by the recipient,” the rule
has lowered the bar that the legislature set, thus expanding availability
for supplemental income benefits beyond what the statute authorizes.
According to Accident Fund, removing the submission requirement
allows nearly any inquiry (including a call that merely asks if a business
is even hiring) to qualify as a job application.
Accident Fund’s initial premise is surely correct: a stroke of the
department’s rulemaking pen cannot nullify any condition that the
legislature imposes on the entitlement to benefits. “Given the vast power
allocated to governmental agencies in the modern administrative state,”
our exercise of “judicial oversight . . . represents an important check on
government power that might otherwise exist without meaningful
limits.” Nat’l Ass’n of Indep. Insurers v. Tex. Dep’t of Ins., 925 S.W.2d
667, 670 (Tex. 1996). On its face, then, Accident Fund’s petition appears
to implicate weighty questions for our attention, potentially rising to the
level of unauthorized assumption of legislative power by an executive-
branch agency.
The nature of Accident Fund’s challenge, however, prevents us
from reaching the question presented. Where a party brings a facial
challenge of this sort, it must show that the rule’s text is invalid—in this

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case, that the rule is inherently incompatible with the enabling statute.
See Tex. Bd. of Chiropractic Exam’rs v. Tex. Med. Ass’n, 616 S.W.3d 558,
570 (Tex. 2021) (citing Tex. Gov’t Code § 2001.038(a)). No arbitrary hoop
to clear, this limitation recognizes that “facial challenges threaten to
short circuit the democratic process by preventing duly enacted laws from
being implemented” legally. Moody v. NetChoice, LLC, 603 U.S. 707, 723
(2024) (citation and internal quotation marks omitted). This logic applies
perforce to facial rule challenges: striking down rules in toto risks
treading on the legislature’s and executive’s authority to respectively
make and enforce the law.
Accident Fund defends its challenge by suggesting that it would
violate the statute if actions like merely phoning a business to ask if it is
hiring satisfy the statute’s “submitted by the recipient” requirement. But
neither do such acts clearly fall within the meaning of “job application,”
a term used in both the statute (§ 408.1415(a)(3)) and the rule
(§ 130.102(d)(1)(D)). Assuming that it would be an error for the
department to approve a claim after such a desultory effort to satisfy the
requirement for benefits, would the “submitted by the recipient”
requirement be what makes that approval an error? Or would it be an
overbroad reading of “job application”? I see no clear articulation of how
the rule necessarily requires deviation from what the statute requires—
in other words, the parties offer no example of a case that would
inexorably yield one result under the statute but another under the rule.
At the very least, therefore, this facial challenge to the rule is not one that
clearly warrants this Court’s further review.
Of course, if the department ever orders an insurer to pay benefits

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authorized by the rule but forbidden by the statute, that order will be
subject to challenge. If the insurer prevails, the resulting precedent
would compel the department to follow the statute, which I take to be
Accident Fund’s real goal in this case. The pending petition, by contrast,
involves a theoretical challenge—there may never be any actual case in
which the rule’s omission of the statutory language has an effect that
contravenes the statute.
Accordingly, scrutiny of the rule by this Court at this stage would
be of relatively little benefit and might do some harm. My vote may have
been different if Accident Fund had shown why the rule, as drafted, would
inescapably violate the statutory mandate—and I would likely vote to
grant a petition brought by Accident Fund or any insurer able to show in
a specific case that the application of the rule has violated the statutory
mandate. If a case like that arises, we can resolve it on a good record; if
one never comes, then it would confirm the wisdom of declining to take it
on as a facial challenge.
B
Accident Fund’s other petition does challenge a specific award of
benefits, but denial of the petition is again appropriate. In No. 23-0950,
Accident Fund General Insurance Co. v. Mendiola, Accident Fund
challenges an award of “lifetime income benefits” to Rodrigo Mendiola.
Mendiola claimed benefits after asphalt from a truck he was driving
spilled into the cabin, resulting in severe burns across the left side of his
body. Mendiola’s left leg was amputated above the knee, and he required
extensive surgeries and skin grafts across his left side. According to
expert testimony, these surgeries left Mendiola’s left hand “so frozen and

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so [e]ncased by scar that . . . there [is] no function of that hand.” No. 13-
21-00361-CV, 2023 WL 6631948, at *1 (Tex. App.—Corpus Christi–
Edinburg Oct. 12, 2023) (emphasis added). Though Mendiola still has a
left hand in the literal sense, it only functions “like a club.” Id.
In this case, the department initially ruled against Mendiola, and
it was through litigation that he ultimately prevailed. In challenging the
award of benefits as ordered by the district court and affirmed by the
court of appeals, Accident Fund raises a serious legal argument: that the
lower courts improperly ignored a statute in favor of an older, judge-made
standard when determining that Mendiola suffered a loss of his left hand
sufficient to trigger his entitlement to benefits.
The standard that the courts below followed comes from this
Court’s 62-year-old decision in Travelers Insurance Co. v. Seabolt, 361
S.W.2d 204 (Tex. 1962). We there defined “total loss of the use of a
member” to mean that “such member no longer possesses any substantial
utility . . . or [its] condition . . . is such that the workman cannot procure
and retain” employment requiring its use. Id. at 206. Unsurprisingly,
Texas workers’ compensation law has changed dramatically in the six
decades since Seabolt. The statute that Seabolt interpreted no longer
exists. A new, differently worded provision, enacted in 1993 and codified
at Labor Code § 408.161, now governs the award of lifetime benefits. As
pertinent to Mendiola’s case, the statute mandates payment of benefits
for the “loss of one hand at or above the wrist,” while clarifying that “the
total and permanent loss of use of a body part is the loss of that body part.”
Tex. Lab. Code § 408.161(a)(4), (b) (emphasis added).
The parties heavily debate the import of token citations of Seabolt

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by this Court over the years. But when there is a valid exercise of
legislative authority, it is axiomatic that “the more recent statutory
enactment prevails over an earlier statute,” City of Dallas v. Mitchell,
870 S.W.2d 21, 23 (Tex. 1994), which also means that a newer statute
supersedes case law interpreting or applying an older statute. These
principles create no “conflict.” When the judicial branch authoritatively
determines the meaning of particular statutory language, the legislature
cannot countermand the interpretation—but it can change the law by
enacting a new statute or amending an existing one. When it does so, the
judiciary’s duty is to cheerfully apply the text of the new law rather than
the judicial gloss on an old law.
All this is to say that, to the extent any court cites a judicial
decision like Seabolt in derogation of the plain meaning of current and
controlling statutory law, it does so erroneously. Without taking any view
on whether such an error occurred below, however, I conclude that this
case does not provide a good opportunity to examine Seabolt’s continuing
viability. To see why, consider the purported difference between the
standards in Seabolt and in § 408.161 as it stands today:
• Seabolt provides that “total loss of the use of a member” for
benefits purposes may exist in two situations: first, where the
member “no longer possesses any substantial utility”; and
second, in what the Court referred to as a “broader concept,”
where loss of the member “prevent[s] the workman from
procuring and retaining employment requiring” its use. 361
S.W.2d at 206.
• Today’s § 408.161(b) makes no mention of employment, instead

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requiring proof of “total and permanent loss of use of a body
part.” Tex. Lab. Code § 408.161(b).

Under either standard, Mendiola’s injury qualifies for benefits. As
the court of appeals described, one result of his injuries is that Mendiola
“drops objects, can only use his left hand as one would [use] a club,” and
“experiences pain after performing tasks” in even this limited way. 2023
WL 6631948, at *5.
In other words, this case provides no useful opportunity to choose
between apparently competing standards because they do not compete
in this case. Whether the inquiry is about “substantial utility,”
“procuring and retaining employment,” or simply “total and permanent
loss of use,” the facts below clearly show that Mendiola meets the test.
As such, the result here will be the same regardless of whether Seabolt
governs, or whether the statutory language governs, or whether Seabolt
maps closely onto the statute, or whether the current text should be
understood in light of rather than in contradistinction of Seabolt. The
court of appeals rightly affirmed the result, even if its reasoning was
unsound—a question on which I express no view. This Court’s definitive
guidance will be better given when we have a case in which the record
helps us to refine the meaning of the standard that we will direct the
lower courts to follow. This record does the opposite.
The Court therefore properly denies the petition, which raises no
other worthwhile grounds for reversal. But as with Accident Fund’s first
petition, the question raised by this one remains serious. If a future case
arises in which the choice between Seabolt and the current statutory text
is outcome-determinative, this Court’s selection of the proper standard

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would actually matter—and that will be a case in which the Court could
properly expend the energy to clarify the law. If no such case ever comes
to us, it will mean that the department and the lower courts are already
resolving any potential tension.
II
These cases illustrate that denial of a petition for review does not
necessarily reflect disagreement with the petition’s legal assertions or
suggest that the petition presents matters that are not important to the
jurisprudence of the State. The challenge to the department’s alleged
overbroad reading of “job applications” adequate to warrant supplemental
income benefits would likely merit review, for example, if brought to
challenge a specific award or if brought in the context of a showing that
the rule would clearly mandate unlawful awards. Administrative
agencies in Texas have seemingly never enjoyed the deference once
endorsed by the U.S. Supreme Court, see Chevron, U.S.A., Inc. v. Nat.
Res. Def. Council, Inc., 467 U.S. 837 (1984), although our cases have
occasionally hinted that “the analysis in which we engage is similar,” R.R.
Comm’n of Tex. v. Tex. Citizens for a Safe Future & Clean Water, 336
S.W.3d 619, 625 (Tex. 2011). If ever there were a time to transform
similarity into sameness (a doubtful proposition all along in this context),
it is certainly not now, when the Supreme Court has decidedly abandoned
Chevron as “fundamentally misguided.” See Loper Bright Enters. v.
Raimondo, 603 U.S. 369, 407 (2024). In a future case challenging a
specific award of supplemental income benefits, then, this Court could
(and should) assess critically an agency’s power to rewrite, under the
guise of interpretation, the statutory criteria that limit benefits awards.

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The same is true of the trial court’s use of the Seabolt standard in
the second petition. Here, the waters are not clouded by agency
authority—the alleged error is one of pure judicial decision-making.
Where judge-made law, even judge-made law from the State’s highest
court, is superseded by valid legislation that adopts a different standard,
the judicial task is clear: applying the plain text of the new law as chosen
by the People’s legislative representatives. Reflexively citing an old
standard may reflect commendable respect for stare decisis, a respect
duly noted by the court of appeals in Mendiola. But stare decisis itself
requires that a precedent yield when it has been “superseded” by “higher
authority,” which includes “an applicable legislative . . . provision.”
Mitschke v. Borromeo, 645 S.W.3d 251, 256–57 (Tex. 2022). Because
Mendiola wins either way, the question presented turns out to be
abstract. If the courts are in fact misidentifying or misapplying the
binding law of the State in material ways, then a future challenge under
§ 408.161 may well warrant review. If no petition alleging such conflict
ever comes, then perhaps Seabolt and the current statute are not actually
at odds after all.

* * *

For the foregoing reasons, I respectfully concur in the denial of the
petitions for review, even as I acknowledge the potentially significant
issues that the petitions raise.

Evan A. Young
Justice

OPINION FILED: February 7, 2025

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