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BULLOCK v. AIU INS. CO

Supreme Court of Mississippi
May 8, 2008
2007 FC 1859 (Miss. 2008)

Opinion

No. 2007-FC-01859-SCT.

May 8, 2008.

ATTORNEY FOR APPELLANT: LANCE L. STEVENS.

ATTORNEYS FOR APPELLEES: REBECCA B. COWAN, EDWARD J. CURRIE, JR., WILLIAM W. McKINLEY, JR.

EN BANC.


¶. This matter is before the Court as a certified question from the United States Court of Appeals for the Fifth Circuit. M.R.A.P. 20. The Court is asked to determine when a decision from an administrative law judge of the Workers' Compensation Commission becomes final for purposes of determining when the statute of limitations begins to run for bringing a tortious breach-of-contract action against an employer, a workers' compensation insurance carrier, and a third-party claims administrator.

STATEMENT OF THE CASE

The Statement of Case and Proceedings are taken largely from the order certifying the question to this court. Emphasis and footnotes have been omitted.

¶. Plaintiff Jimmy Bullock appeals the district court's final judgment entered July 17, 2006, in which the court granted defendants' motion for summary judgment. The court concluded that the applicable statute of limitations barred Bullock's suit alleging bad faith in the denial of his workers' compensation benefits and dismissed with prejudice all of his claims against all defendants. At issue is whether Bullock's bad-faith cause of action accrued in 1999 when the Mississippi Workers' Compensation Commission administrative law judge issued an order declaring Bullock's injury compensable, or instead, in 2003, when the administrative law judge issued his final order, which was not appealed to the full commission.

¶. The parties agree that Mississippi law is applicable, and that under Mississippi law, a suit such as Bullock's, for bad-faith failure or refusal to pay workers' compensation benefits, may not be filed until the administrative remedies provided by the Mississippi Workers' Compensation Act, Mississippi Code Annotated Sections 71-3-1 to-129 (Rev. 2000), and the Mississippi Workers' Compensation Commission are exhausted. Further, they agree that the three-year limitations period prescribed at Mississippi Code Annotated Section 15-1-49(1) (Rev. 2003) governs Bullock's bad-faith action, which was filed August 26, 2004 (and subsequently removed by the defendants to the United States District Court for the Southern District of Mississippi on the basis of diversity jurisdiction). Finally, all parties to this appeal concede that if Bullock's administrative remedies were exhausted in November or December 1999 such that he could have brought his bad-faith cause of action at that time, "the bad-faith claim expired before it was filed and the trial court's dismissal must be affirmed."

PROCEEDINGS BEFORE THE MISSISSIPPI WORKERS' COMPENSATION COMMISSION

¶. In November 1996, Bullock was working as a subcontractor in Bay St. Louis, Mississippi, for defendant The Gottfried Corporation, a Louisiana corporation, when he injured both his knees while stepping off a ladder. Bullock filed a claim for workers' compensation benefits with defendant AIU Insurance Company, Gottfried's workers' compensation insurer. A dispute arose over whether Bullock was covered under Gottfried's workers' compensation policy with AIU. Coverage was denied.

¶. On January 9, 1997, Bullock filed a petition to controvert with the Mississippi Workers' Compensation Commission. On October 12, 1999, after conducting a hearing at which (as the October 12 order expressly states), the "only issue" considered was "the threshold issue of whether defendants are liable for payment of workers' compensation benefits under the Act," an administrative law judge issued and entered an order finding that Bullock was an insured and that he was entitled to workers' compensation benefits under the AIU policy. No one appealed the judge's decision finding compensability to the full commission. AIU and defendant AIG Claims Services, Inc., promptly paid all back benefits owed Bullock, and Bullock began receiving and continued to receive workers' compensation benefits.

¶. Thereafter, the issue of temporary and permanent disability-which the parties had agreed to reserve pending a ruling on the issue of coverage-was litigated before the administrative law judge. A final hearing on the merits was scheduled for October 2003. In their pretrial statement, Gottfried and AIU included among "contested issues" the issue of "whether employer and carrier herein are the responsible employer and carrier regarding this claim." Also in their pretrial statement, Gottfried and AIU explained, "The parties have discussed the potential of having a bifurcated hearing in this matter, with the question of whether or not the Gottfried Corp. is the responsible employer being the only issue . . . to be decided at the first hearing."

¶. After a hearing on October 15, 2003, the administrative law judge entered an order on December 1, 2003, declaring Bullock's claim compensable and awarding Bullock additional workers' compensation benefits. On May 25, 2004, the commission approved payment of a commuted, lump-sum payment to Bullock, based on benefits awarded in the order of December 1, 2003.

This act is an administrative event, not a substantive act with regard to a claim before the commission. See Miss. Code Ann. § 71-3-29 (Rev. 2000).

PROCEEDINGS OF THE BAD-FAITH ACTION

¶. On August 26, 2004, Bullock filed a bad-faith action in the Circuit Court of Hancock County, Mississippi, against Gottfried, AIU, and AIG, asserting a claim for bad-faith refusal to provide workers' compensation benefits. Defendants removed the case based on diversity of citizenship to the United States District Court for the Southern District of Mississippi, Southern Division, on November 18, 2004. 28 U.S.C. § 1332.

¶. Gottfried moved to dismiss Bullock's case, contending that the suit was filed after the applicable statute of limitations period had elapsed. AIU and AIG joined in Gottfried's motion to dismiss and filed an alternative motion for summary judgment, also based on the statute-of-limitations. Gottfried, AIU, and AIG argued that the limitations period began on November 1, 1999, or twenty days after the administrative law judge's October 12, 1999, decision in Bullock's favor-the period within which a request or petition for review by the full commission is permissible under Mississippi Code Annotated Section 71-3-47 (Rev. 2000). Bullock responded on July 1, 2005, arguing that the limitations period did not start until May 25, 2004, when the commission approved the settlement.

¶. The district court heard oral argument on the motions on February 6, 2006, and denied them after expressing its hesitancy to rule as a matter of law that the statue of limitations had run. On February 16, 2006, the defendants filed a motion to reconsider, arguing that the district court was duty bound under Erie Railroad Company v. Tompkins , 304 U.S. 64, 58 S.Ct. 817, 82 L. Ed. 1188 (1938), to address the statute of limitations issue. On February 22, 2006, the district court granted the motion for reconsideration and ordered the parties to file supplemental briefs.

¶. In its opinion and order filed April 28, 2006, the district court concluded that the lawsuit was filed after expiration of the three-year statute of limitations dictated by Mississippi Code Annotated Section 15-1-49 (1). Bullock v. AIU Ins. Co. , 2006 U.S. Dist. Lexis 28764 (S.D. Miss. 2006), question certified, 503 F.3d 348 (5th Cir. 2007). Noting that Bullock's complaint did not allege any actionable conduct after October 12, 1999, and that since October 12, 1999, at the latest, Bullock had been timely paid all compensation benefits to which he was entitled, the court granted the defendants' motion for summary judgment pursuant to Federal Rule of Civil Procedure 56, based on its determination that the limitations period on Bullock's bad-faith claim began to run in October 1999 (when the time to appeal the judge's October 12, 1999, order finding Bullock entitled to benefits expired). Id.

We pause to note the carrier and employer voluntarily paid these benefits. Nothing in the order of the administrative law judge from October 1999 set the amount of benefits or ordered the carrier and employer to pay any amount for any period of time.

QUESTION CERTIFIED

We split the question into two parts. The language is a direct quote from the order.

¶. The question certified to this Court is as follows:

¶. (1) Whether an order, issued in 1999, of a Mississippi Workers' Compensation Commission Administrative Law Judge which determines only that the named employer and compensation insurer are liable to the named employee for compensation benefits in respect to a particular on the job accidental injury, but does not determine the amount or duration of benefits to be paid or any other matter, becomes final if not appealed by any party to the commission within twenty days.

¶. (2) If so, whether the employee claimant has then so exhausted his administrative remedies, notwithstanding that the employee's compensation case against the employer and compensation insurer remains pending before the commission on other issues, such that the three-year limitations period under Mississippi Code Section 15-1-49(1) then commences and continues to run with respect to a subsequent suit by the employee against the employer or compensation insurer for bad-faith failure to pay workers compensation benefits which does not allege any bad-faith action or inaction after the expiration of twenty days following the ALJ's referenced order finding compensability.

DISCUSSION WHETHER THE ADMINISTRATIVE LAW JUDGE'S OCTOBER 1999 RULING BECAME FINAL WHEN NEITHER PARTY APPEALED THE RULING TO THE COMMISSION WITHIN TWENTY DAYS.

¶. We find the October 1999 ruling by the administrative law judge was not a final order from which the statute of limitations period began to run for Bullock to file a complaint against the defendants for bad-faith refusal to provide workers' compensation benefits. For the 1999 hearing, the parties agreed that the singular issue to be determined was the defendants' liability for compensation to Bullock. The parties reserved the issue of temporary and permanent disability for a hearing "on the merits" that would take place in 2003.

The administrative judge's October 1999 order resolved only the issue "whether [Gottfried and AIU] are liable for payment of workers' compensation benefits under the [workers' compensation law]." (Emphasis added). It specifically reserved the issue "of temporary and permanent disability pending a ruling of the issue of coverage." (Emphasis added).

¶. At the time of the October 1999 ruling, Mississippi Workers' Compensation Commission Procedural Rule 10 provided that appeals were to be taken from the decision from the initial hearing. This rule appears to require a decision on the merits of the controverted claim before an appeal can be prosecuted:

In all cases where either party desires a review before the Full Commission from the decision rendered at the initial hearing, the party desiring the review before the Full Commission from any decision rendered by an Administrative Judge, the party desiring the review shall within twenty (20) days of the date of said decision file with the Secretary of the Commission a written request or petition for review before the Full Commission.

Miss. Workers' Comp. Comm'n Procedural R. 10 (prior to amendment; emphasis added).

¶. We are uncertain what was intended by the words, "initial hearing," because the rules do not otherwise define an "initial hearing." A reasonable interpretation can be gleaned from the hearing process that places the final adjudicative process with the commission. Day-Bright Lighting Div., Emerson Electric Co. v. Cummings , 419 So. 2d 211, 212-13 (Miss. 1982). The commission is the fact-finder rather than the administrative law judge. Id.

¶. Rule 10 was modified in April of 2001 to provide for an appeal fromany decision, making it appear to be a departure from "the decision." In any event, the issues addressed in the judge's October 2003 order make the interpretation of the commission's rules less important.

"In all cases where either party desires a review before the Full Commission from any decision rendered by an Administrative Judge. . . ." Miss. Workers' Comp. Comm'n Procedural R. 10 (as amended; emphasis added).

¶. The actions of the parties and the ruling by the administrative judge clearly demonstrate that the hearing in 1999 was interlocutory. The issue of liability for compensation was again submitted by the defendants to the administrative judge for the hearing in October 2003. The judge found the claim compensable and made an award of benefits. This order was final when the defendants filed no appeal within twenty days of the final order entered after the October 2003 hearing. Until that order was final, the administrative remedies were not exhausted, and therefore, no bad-faith action could be filed. Walls v. Franklin Corp. , 797 So. 2d 973 (Miss. 2001).

As stated within the defendant's pre-hearing statement, "Whether employer and carrier herein was the responsible employer and carrier regarding this claim."

The administrative law judge's final order from the October 2003 hearing was entered on December 1, 2003.

CONCLUSION

¶. The first part of the certified question from the Fifth Circuit Court of Appeals is answered in the negative. The administrative law judge's order of 1999, which determined only that the named employer and compensation insurer were liable to the named employee for compensation benefits with respect to a particular on-the-job accidental injury was interlocutory under the facts of this case. A full resolution of compensation benefits was not made until the judge made a final decision in 2003. Since the second part of the question is conditioned upon an affirmative answer to the first, we do not address it.

¶. CERTIFIED QUESTION ANSWERED. DIAZ, P.J., EASLEY, CARLSON, RANDOLPH AND LAMAR, JJ., CONCUR. GRAVES, J., CONCURS IN RESULT ONLY. DICKINSON, J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY SMITH, C.J.


¶. Because I disagree with the majority's conclusion as to when the statute of limitations begins to run for bringing a tortious breach-of-contract action against an employer, a workers' compensation insurance carrier, and a third-party claims administrator, I must respectfully dissent. I am in complete agreement with United States District Judge Louis Guirola, whose well-reasoned opinion in this case is, in my view, exactly correct. Judge Guirola's opinion points out that Bullock's complaint alleged no actionable conduct after 1999. The Workers' Compensation Commission proceedings had nothing whatsoever to do with either the liability or damages issues involved in the bad-faith case, and the majority articulates no reason whatsoever for delaying the limitations period. Thus, the defendants were entitled to summary judgment. See Bullock v. AIU Ins. Co. , 2006 U.S. Dist. LEXIS 28764 (S.D. Miss. April 27, 2006).

¶. Consequently, I would answer the Fifth Circuit's question by holding that the statute of limitations began to run when, contrary to the insurance company's position, the administrative law judge determined that Bullock was entitled to workers' compensation benefits.

SMITH, C.J., JOINS THIS OPINION.


Summaries of

BULLOCK v. AIU INS. CO

Supreme Court of Mississippi
May 8, 2008
2007 FC 1859 (Miss. 2008)
Case details for

BULLOCK v. AIU INS. CO

Case Details

Full title:JIMMY BULLOCK v. AIU INSURANCE COMPANY, THE GOTTFRIED CORPORATION AND AIG…

Court:Supreme Court of Mississippi

Date published: May 8, 2008

Citations

2007 FC 1859 (Miss. 2008)