Texas Employers' Insurance Association v. Price

Texas Court of Appeals · 1989 · Civil Procedure

782 S.W.2d 938 (1989)

Updated July 29, 2026

Civil ProcedureSummary JudgmentCollateral EstoppelJudicial AdmissionsWorkers' Compensation Bad Faithres judicatajudicial admissionbad faith

Facts

Price settled her underlying workers' compensation claims in March 1988 through a release signed by her and her attorney and approved by the trial court in an agreed judgment. The judgment recited that TEIA's liability and the extent of the alleged injury were indefinite, uncertain, and incapable of being satisfactorily established. About one month later, Price sued TEIA for bad faith in processing and handling those claims. TEIA relied on the prior judgment and the release language stating that the settlement resulted from a bona fide disputed claim.

Issue

Whether Price's later bad-faith suit was barred or defeated as a matter of law by the prior workers' compensation settlement judgment and release. More specifically, the court considered whether collateral estoppel, judicial admission, or conclusive summary-judgment proof established that Price could not prove the absence of a reasonable basis for denial or delay.

Rule

A workers' compensation bad-faith claimant must establish (1) the absence of a reasonable basis for denying or delaying payment of benefits and (2) that the carrier knew or should have known there was no reasonable basis for denial or delay. Insurance carriers may deny invalid, uncertain, or questionable claims without bad-faith liability. Collateral estoppel applies when the party to be estopped was a party or in privity in the prior action, the identical issue was actually litigated, the party had a full and fair opportunity to litigate, and the issue was finally determined on the merits and was necessary, essential, and material to the prior outcome; a judicial admission in prior pleadings or stipulations is conclusive against the party making it.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Houston, Elena Ruiz settled her workers' compensation suit against Lone Mesa Casualty through an agreed judgment. Before approving the settlement, the court heard evidence and found that the carrier's liability and the extent of Elena's injury were uncertain and incapable of being satisfactorily established. Two months later, Elena sued Lone Mesa for bad faith based on its earlier delay in paying that same claim.

If Lone Mesa moves for summary judgment, which is the strongest basis under the majority opinion?

Explanation. The majority held that a later bad-faith claim may be barred when a prior settlement judgment necessarily determined that liability or injury extent was indefinite, uncertain, or incapable of satisfactory establishment. That determination is identical to the issue whether the carrier had a reasonable basis to deny or delay payment, because uncertain or questionable claims may be denied without bad-faith liability.