Christopher Rhule, a firefighter for the Houston Fire Department, suffered a permanent on-the-job spinal injury on February 25, 1988. Rhule and the City reached a settlement on his workers’ compensation claim under which the City paid Rhule $36,000 and agreed to pay his “lifetime reasonable and necessary medical expenses for the injuries” that were the basis of his claim.
The City honored the terms of the agreement for a number of years, including paying Rhule’s bills for office visits with his treating physician, his pain medication, and the installation of a pain pump. Then the pain pump began to fail. Rhule’s treating physician, Dr. Alvarez, as well as Dr. Elizabeth Duncan, a respected pain specialist hired by the City without Rhule’s knowledge, both recommended that the pain pump be replaced. However, the City, which had changed risk managers, determined that the pain pump and other medications and treatments sought by Rhule and his physician were not reasonable, necessary, and related to the 1988 work injury. In addition to refusing to replace the pain pump, the City decided to quit paying for Rhule’s physician visits and his pain medications, taking the position that they were as not reasonably necessary.
Rhule sued the City, seeking compliance with the settlement agreement and also seeking damages for pain and suffering and mental anguish. When a jury determined, among other things, that Rhule was entitled to $50,000 for past physical pain, the City challenged the jury’s award in the Texas Court of Appeals.
The City argued that Rhule’s claims were essentially claims that the City breached a contract – the settlement agreement – it had with Rhule, and that damages for pain and suffering are not available in breach-of-contract lawsuits. The Court disagreed, finding that the unusual nature of the City’s contract with Rhule allowed him to recover pain damages.
In a mouthful, the Court reasoned that “recovery of non-economic damages, including damages for pain and suffering and mental anguish, is permitted when the claimant shows either that an employer that is party to a settlement agreement under the Texas Workers’ Compensation Act for an injury contemplated by the Act breached its common law duty of good faith and fair dealing or that it committed an intentional wrongful act separate from the injured workers’ compensation claim that produced an independent injury and that the pain and suffering or mental anguish that followed the breach was a foreseeable result of the breach.
“Rhule and the City reached a valid and binding settlement agreement in 1990 for the lifetime provision of Rhule’s reasonable and necessary medical care, including care for his permanent pain caused by his compensable on-the-job spinal cord injury. At the point an enforceable contract was entered between the City and Rhule, the City became obligated to perform its contractual duties in good faith. The City performed its obligations under the Settlement Agreement, including paying for Rhule’s doctor visits, for his pain medications, and for the installation of a pain pump, for more than a decade.
“In 2004, the City intentionally breached the agreement by refusing to pay for replacement of the failing pain pump, against the recommendation of Rhule’s treating physician, agreed to by both parties in the Settlement Agreement, and the recommendation of an expert pain-management physician hired by the City itself and, subsequently, by refusing to pay for Rhule’s doctor visits and pain medications. The City provided no justification for these actions whatsoever other than its own unilateral determination that coverage of Rhule’s pain pump, doctor visits, and pain medications was not medically necessary and that it was immune from liability for its acts.
“The City’s breach of the Settlement Agreement produced entirely foreseeable and necessarily foreseen consequences: Rhule suffered severe and disabling physical pain and mental anguish that interfered with his performance of his daily activities and his ability to work. These injuries were precisely of the type for which recovery is available due to the special relationship that existed between Rhule and the City and the essentially non-economic nature of the damages incurred for physical pain and suffering and mental anguish.”
City of Houston v. Rhule, 377 S.W.3d 734 (Texas App. 2012).