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Wilson v. Sentry Ins. Co.

Appeals Court of Massachusetts.
Feb 25, 2022
100 Mass. App. Ct. 1126 (Mass. App. Ct. 2022)

Opinion

21-P-399

02-25-2022

Daniel WILSON v. SENTRY INSURANCE A MUTUAL COMPANY & others.


MEMORANDUM AND ORDER PURSUANT TO RULE 23.0

After he was convicted of workers’ compensation fraud, plaintiff Daniel Wilson filed a civil complaint alleging that representatives of his former employer, Southworth-Milton, Inc. (SMI), conspired to extort him while negotiating the settlement of his workers’ compensation claim. The defendants in the civil action included Attorney Teresa Brooks Benoit, who represented Wilson during settlement negotiations; SMI; SMI's workers’ compensation claims coordinator, Camille Kantorski; SMI's insurer, Sentry Insurance a Mutual Company (Sentry); one of Sentry's attorneys, Thomas G. Bradley; Attorney Bradley's law firm; and a Sentry claims adjuster, Jodie Driscoll. On appeal, Wilson claims error in rulings on (1) SMI and Kantorski's motion to dismiss, (2) multiple discovery and scheduling orders, and (3) the defendants’ motions for summary judgment. For the reasons that follow, we affirm.

The claims against Attorney Benoit were settled and are not part of this appeal.

Factual background. We draw the undisputed material facts from the summary judgment record, reserving some facts for our discussion of the issues raised. Wilson was employed by SMI in August 2006, when he sustained a workplace injury for which SMI paid workers’ compensation benefits. Following the injury, Wilson earned income from self-employment which he did not report on financial statements he submitted to SMI and Sentry in connection with his workers’ compensation claim. While Kantorski, Driscoll, and Attorney Bradley had suspected since July 2007 that Wilson was working and not reporting his income, it was not until October 7, 2008, that Attorney Bradley obtained invoices which confirmed Wilson's unreported income.

SMI's workers’ compensation insurance policy with Sentry had a $350,000 deductible which Wilson's claim did not exceed. Therefore, Sentry's role in the case was limited to administering Wilson's claim.

Such conduct violated G. L. c. 152, § 14 (3), which prohibits knowing false statements or submissions for the purpose of obtaining workers’ compensation benefits, and G. L. c. 266, § 111A, which prohibits the presentation of a false account or written statement in connection with an insurance claim.

On October 8, 2008, Attorney Bradley and Kantorski met Attorney Benoit and Wilson at the Department of Industrial Accidents (DIA) to negotiate a lump sum settlement of Wilson's workers’ compensation claim. At Attorney Bradley's request, Wilson executed an updated earnings report under the pains and penalties of perjury. Again, Wilson failed to disclose his self-employment income. Attorney Bradley then confronted Attorney Benoit with the invoices, told her that SMI had "no interest" in reporting Wilson to the insurance fraud bureau (IFB), and offered a lump sum of $1.00 to settle the case. Wilson rejected the offer, but after further negotiations agreed to a lump sum payment of $2,500. SMI agreed to waive its right to recoup any overpayment or workers’ compensation benefits. In a side agreement not reflected on the settlement form submitted to the DIA, Kantorski also agreed that she would not report Wilson to the IFB and that SMI would pay Attorney Benoit a $5,000 fee. Wilson's principal motivation in settling the workers’ compensation claim was avoiding a fraud investigation and a lawsuit seeking to recoup the overpayments. On October 17, 2008, a judge of the DIA approved the lump sum settlement.

After the settlement was approved, Kantorski consulted with another Sentry attorney, Leonard Nason, who told her that the agreement not to report Wilson's fraudulent conduct was a violation of law. Based on that consultation, Kantorski reported Wilson's false statements to the IFB. Ultimately, after a jury trial in the Superior Court, Wilson was convicted on an indictment for workers’ compensation fraud. See G. L. c. 152, § 14 (3). After an evidentiary hearing, the sentencing judge declined to order restitution, concluding that the Commonwealth had not proved that "anyone other than the defendant himself is out of pocket as a result of his fraud." Wilson's conviction was affirmed on appeal. See Commonwealth v. Wilson, 83 Mass. App. Ct. 1116 (2013).

Wilson was also indicted for larceny over $250. At trial, a judge allowed Wilson's motion for a required finding of not guilty on that offense.

Procedural history. Approximately four months after he was convicted of workers’ compensation fraud, Wilson filed a complaint seeking damages from the defendants. Wilson generally alleged that (1) the lump sum settlement of his workers’ compensation claim was a product of extortion, and (2) the defendants breached the agreement not to report Wilson to the IFB and not to seek to recoup overpayments. More specifically, Wilson alleged claims of intentional and negligent infliction of emotional distress, violations of G. L. c. 93A, breach of fiduciary duty, breach of contract, negligence, and loss of consortium.

A Superior Court judge (motion judge) ruled on three motions from which Wilson appeals. First, the motion judge allowed a motion by SMI and Kantorski (together, the SMI defendants) to dismiss the claims for negligent infliction of emotional distress and violation of G. L. c. 93A. Second, the motion judge denied a motion by Wilson for reconsideration of the order of dismissal. Third, the motion judge denied a motion for reconsideration of an order denying, in part, Wilson's motion to compel Attorney Bradley's answers to interrogatories and production of documents.

On January 17, 2019, a different Superior Court judge (second motion judge) entered a scheduling order which imposed a discovery deadline of April 30, 2019. Wilson appeals that order and the denial of a related motion for reconsideration. Wilson also challenges a July 12, 2019 scheduling order entered by a third Superior Court judge (third motion judge).

All defendants also moved for summary judgment on the remaining claims. After the claims against Attorney Benoit were dismissed by agreement of the parties, the third motion judge issued a written decision allowing summary judgment for the remaining defendants.

Summary judgment entered on the claims (1) against the SMI defendants for breach of contract, intentional infliction of emotional distress, and loss of consortium, (2) against Sentry, Driscoll, Attorney Bradley, and Attorney Bradley's firm for intentional infliction of emotional distress, and (3) against Sentry, Attorney Bradley, and the firm for loss of consortium and violation of G. L. c. 93A.

Discussion. 1. Motion to dismiss. The motion judge dismissed Wilson's c. 93A claims against the SMI defendants, reasoning that "[t]his dispute between employer and employee does not involve trade or commerce." Our review of the order of dismissal is de novo. See Ryan v. Holie Donut, Inc., 82 Mass. App. Ct. 633, 635 (2012).

Wilson makes no argument regarding dismissal of his claim for negligent infliction of emotional distress, and we decline to address it. See Mass. R. A. P. 16 (a) (9) (A), as appearing in 481 Mass. 1628 (2019). For the same reason, we do not address Wilson's appeal of the order denying reconsideration of the order of dismissal.

Chapter 93A liability for unfair and deceptive business practices requires "an arm's-length commercial transaction between distinct business entities." Manning v. Zuckerman, 388 Mass. 8, 11 (1983). The statute "does not provide a remedy for disputes arising out of an employer-employee relationship, or for disputes that occur within a single company" (citations and quotations omitted). Psy-Ed Corp. v. Klein, 459 Mass. 697, 719 (2011).

Here, the conduct alleged in the complaint, even if true, arose from Wilson's employment with SMI and the administration of his workers’ compensation claim. Such allegations are "fundamentally encompassed within the overarching workers’ compensation framework," Fleming v. National Union Fire Ins. Co., 445 Mass. 381, 383 (2005), and fall outside the scope of G. L. c. 93A. See Maxwell v. AIG Domestic Claims, Inc., 460 Mass. 91, 109 (2011) ("where there is overlap, the remedies of G. L. c. 152 are exclusive of those provided by G. L. c. 93A"). Accordingly, there was no error in the dismissal of Wilson's c. 93A claim against the SMI defendants.

Wilson acknowledges as much in his brief.

2. Discovery rulings. a. Motion to compel. In 2015, Wilson filed a motion to compel discovery from Sentry, Driscoll, Attorney Bradley, and Attorney Bradley's firm (together, the Sentry defendants) that the Sentry defendants asserted was protected by the attorney-client privilege or work product doctrine. Wilson argued that the judge should order the discovery of the privileged information because Attorney Bradley and Sentry extorted Wilson and, therefore, the crime-fraud exception to the attorney client privilege applied. On August 23, 2016, the motion judge allowed the motion, in part, ordering production of privileged documents and communications created on or after October 8, 2008, the day of the settlement conference.

The motion judge denied the request for work product, reasoning that Wilson "pointed to no case law which suggests that the crime-fraud exception also applies to the work-product doctrine."

Wilson filed a motion for reconsideration in December of 2016. In March 2019, the motion judge allowed the motion for reconsideration, in part, by extending the crime-fraud exception to work product created on or after October 8, 2008. The motion judge limited discovery to work product on or after that date because "[t]he untested allegations of extortion provide a reasonable basis to believe only that wrongful intent and conduct occurred at the October 8, 2008 hearing."

Therefore, we need not address Wilson's claim of error in the original ruling on the motion to compel.

Wilson first contends that the motion judge's delay in deciding the motion for reconsideration deprived him of due process because he was unable to conduct depositions before the close of discovery. We are not persuaded. Wilson's choice to wait over two years before pursuing depositions or a ruling on the motion for reconsideration "is no basis to ascribe reversible error to the [motion] judge." Matter of a Grand Jury Investigation, 437 Mass. 340, 360 (2002). Moreover, the decision on the motion to compel did not prevent Wilson from conducting depositions. It merely limited the subject matter of those depositions. There was no due process violation.

Next, Wilson claims that the motion judge misapplied the crime-fraud exception when he limited discovery to information created on or after October 8, 2008. We review the motion judge's decision regarding the application of the crime-fraud exception de novo. Commissioner of Revenue v. Comcast Corp., 453 Mass. 293, 302 n.18 (2009). The crime-fraud exception applies where "the services of the lawyer were sought or obtained to enable or aid anyone to commit or plan to commit what the client knew or reasonably should have known to be a crime or fraud" (quotations omitted). Purcell v. District Attorney for the Suffolk Dist., 424 Mass. 109, 112 (1997). The party invoking the exception must prove by a preponderance of the evidence that it applies. Matter of a Grand Jury Investigation, 437 Mass. at 357. This requires a showing that (1) the client was engaged in or planning criminal or fraudulent activity when the privileged communications took place, and (2) "the communications were intended by the client to facilitate or conceal the criminal or fraudulent activity." United States v. Gorski, 807 F.3d 451, 460 (1st Cir. 2015), quoting Matter of Grand Jury Proceedings, 183 F.3d 71, 75 (1st Cir. 1999).

Wilson argues that the crime-fraud exception applied in this case because Attorney Bradley engaged in extortion at the settlement conference. The elements of extortion are "(1) a malicious threat (2) made to a named person (3) to accuse someone of a crime or to injure someone's person or property (4) with intent to extort money." Commonwealth v. Miller, 385 Mass. 521, 526 (1982). According to Wilson, the SMI defendants used Attorney Bradley to convey a malicious threat to report Wilson for fraud, with the intent to extort a favorable lump sum settlement.

It is not clear from the record, however, that a threat was ever communicated by Attorney Bradley. Attorney Benoit testified that there was no threat. According to Attorney Benoit, Attorney Bradley told her that SMI "had no interest in reporting [Wilson]." On the other hand, in a letter to Sentry the day after the settlement conference, Attorney Bradley said, "I further stressed to ... Ms. Benoit that if [Wilson] did not accept our offer, then we would not hesitate to refer [him] for criminal prosecution...." Even assuming that Attorney Bradley communicated that threat to Attorney Benoit on October 8, 2008, we agree with the motion judge that Wilson failed to establish "a reasonable basis to believe [Sentry] used Attorney Bradley's services to foster the crime of extortion at any time prior to the October 8, 2008 hearing." The record does not support Wilson's argument that the Sentry defendants had been planning criminal activity since July of 2007. In short, the motion judge did not abuse his discretion in denying Wilson's motion for reconsideration of the order denying, in part, the motion to compel privileged communications that predated October 8, 2008.

We note that Mass. R. Prof. C. 3.4 (h), as appearing in 471 Mass. 1425 (2015), prohibits a lawyer from threatening to present criminal charges solely to obtain an advantage in a private civil matter. The record reflects that the potential ethical violation was reported to the Office of Bar Counsel by the judge who presided over Wilson's criminal trial.

b. Scheduling orders. Wilson appeals the January 17, 2019, scheduling order setting an April 30, 2019 discovery deadline and a July 12, 2019 order precluding further discovery. Such orders are "committed to the sound discretion of the trial judge," Greenleaf v. Massachusetts Bay Transp. Auth., 22 Mass. App. Ct. 426, 429 (1986), and we see no abuse of discretion here. The April 30 deadline was set by the second motion judge in consultation with the parties after a lengthy hearing. Wilson did not object. By then the case was seven years old. As to the July scheduling order, absent evidence that Wilson tried between January and April 2019 to depose the five witnesses he claims are critical to his case, we see no abuse of discretion by the third motion judge in her decision to deny Wilson's request for more time.

Wilson also appeals the denial of a motion for reconsideration of the January 17, 2019, order, but makes no argument about that order in his brief. Accordingly, we do not address it. Mass. R. A. P. 16 (a) (9) (A).

3. Summary judgment. The third motion judge granted summary judgment on the claims for breach of contract, intentional infliction of emotional distress, violation of G. L. c. 93A, and loss of consortium. We review summary judgment de novo to determine "whether, viewing the evidence in the light most favorable to the nonmoving party, all material facts have been established and the moving party is entitled to a judgment as a matter of law." Augat, Inc. v. Liberty Mut. Ins. Co., 410 Mass. 117, 120 (1991). See Mass. R. Civ. P. 56 (c), as amended, 436 Mass. 1404 (2002).

a. Breach of contract. The general rule is that courts will not aid either party in the enforcement of an illegal contract. Arcidi v. National Ass'n of Gov't Employees, Inc., 447 Mass. 616, 619 (2006). Here, the parties acknowledge that the agreement not to report Wilson's workers’ compensation fraud was illegal. See G. L. c. 152, § 14 (3) (prohibiting the failure to disclose conduct affecting workers’ compensation payment). "The doctrine of in pari delicto bars a plaintiff who has participated in wrongdoing from recovering damages for loss resulting from the wrongdoing." Merrimack College v. KPMG LLP, 480 Mass. 614, 615 (2018), quoting Choquette v. Isacoff, 65 Mass. App. Ct. 1, 3 (2005).

There is an exception to the doctrine of in pari delicto "where the parties are not in equal fault as to the illegal element ... and where there are elements of public policy more outraged by the conduct of one than of the other ..." (quotations and citation omitted). Merrimack College, 480 Mass. at 623. In such cases, "relief in equity may be granted to the less guilty" (citation omitted). Id. Wilson argues that summary judgment should not have entered for the SMI defendants because the third motion judge failed to consider all of the facts in weighing the relative fault of the parties. We are unpersuaded. It was undisputed that Wilson repeatedly committed perjury to obtain workers’ compensation payments. Wilson withheld that information from his attorney and allowed her to present a fraudulent earnings report to Attorney Bradley even though he knew that Sentry had invoices which contradicted the report. Wilson then settled his claim to avoid prosecution and an obligation to return the payments. On this record, no reasonable juror could conclude that, because they investigated Wilson's criminal conduct and negotiated a favorable settlement, the SMI defendants were equally at fault, or in pari delicto. There was no error in the conclusion that the doctrine of in pari delicto barred recovery by Wilson.

The record does not support Wilson's assertion that the payment of Attorney Benoit's fee was a "bribe." Benoit testified that she accepted the fee from SMI so Wilson would not have to pay it.

The SMI defendants also agreed that they would not seek to recoup any overpayment from Wilson. Nothing in the summary judgment record suggests that the SMI defendants affirmatively sought to recoup overpayment. While there is evidence that Kantorski reported Wilson's conduct to the IFB, the SMI defendants played no role in Wilson's prosecution other than "that of a victim or complaining witness" once it commenced. Maxwell, 460 Mass. at 111. The restitution hearing was not requested by the defendants. It was required as part of the criminal prosecution. See G. L. c. 152, § 14 (3) ; Commonwealth v. Ellis, 429 Mass. 362, 374 (1999). After considering the evidence at the hearing, the judge found that no restitution was owed because none of the defendants suffered any loss. The restitution order, upon which Wilson heavily relies, simply does not support an inference that the SMI defendants actively pursued recoupment.

b. Remaining claims. The third motion judge correctly concluded that Wilson's c. 93A claim against Attorney Bradley, his firm, and Sentry failed because the conduct of which Wilson complains -- investigating reports that Wilson was working while collecting benefits, confronting Wilson at the settlement conference, paying Attorney Benoit's fee, and threatening criminal prosecution -- did not take place "within the confines of a business-to-business transaction between" Wilson and these defendants. Adams v. Liberty Mut. Ins. Co., 60 Mass. App. Ct. 55, 63 n.14 (2003). Rather, Bradley and Sentry were standing in the shoes of the insured, placing their conduct "well within the primary goal of c. 152" and outside the scope of G. L. c. 93A. Boduch v. Aetna Life & Cas. Co., 26 Mass. App. Ct. 462, 466 (1988). See Maxwell, 460 Mass. at 110.

Further, the doctrine of in pari delicto also applies to chapter 93A claims. See Choquette, 65 Mass. App. Ct. at 3. For the reasons we have stated, supra, where it is undisputed that Wilson fraudulently concealed his income so that he could receive workers’ compensation benefits, he cannot recover losses that flow from that wrongdoing. Id.

The third motion judge did not enter summary judgment in favor of the Sentry defendants on the c. 93A claim for this reason, but we may affirm on any basis supported by the record. See Lopes v. Commonwealth, 442 Mass. 170, 181 (2004).

Finally, even viewed in the light most favorable to Wilson, the defendants’ conduct in investigating and negotiating Wilson's workers’ compensation claim was not so extreme and outrageous as to constitute the intentional infliction of emotional distress. As a matter of law, Kantorski's broken promise not to report Wilson did not give rise to a claim for intentional infliction of emotional distress, because "[f]or a defendant's conduct to qualify as extreme and outrageous, the defendant must have acted ‘without privilege.’ " Polay v. McMahon, 468 Mass. 379, 386 (2014), quoting Agis v. Howard Johnson Co., 371 Mass. 140, 144 (1976). As the workers’ compensation claims coordinator for her company, Kantorski was required to report Wilson's fraud. See Maxwell, 460 Mass. at 111, quoting St. 1996, c. 427, § 13 (e ) ("An insurer is mandated to file a report when it has ‘reason to believe that an insurance transaction may be fraudulent’ ").

Because the loss of consortium claims derive solely from Wilson's tort claims, which were properly dismissed, there was no error in the order of summary judgment in favor of all defendants on the loss of consortium claims. See Sena v. Commonwealth, 417 Mass. 250, 264 (1994).

Conclusion. The order entered on August 6, 2015, allowing the motion to dismiss, is affirmed. The order entered on September 10, 2019, allowing the motions for summary judgment, is affirmed.

So ordered.

Affirmed


Summaries of

Wilson v. Sentry Ins. Co.

Appeals Court of Massachusetts.
Feb 25, 2022
100 Mass. App. Ct. 1126 (Mass. App. Ct. 2022)
Case details for

Wilson v. Sentry Ins. Co.

Case Details

Full title:Daniel WILSON v. SENTRY INSURANCE A MUTUAL COMPANY & others.

Court:Appeals Court of Massachusetts.

Date published: Feb 25, 2022

Citations

100 Mass. App. Ct. 1126 (Mass. App. Ct. 2022)
182 N.E.3d 348