Summary
finding that insured could not establish a valid claim under insurance contract when insured failed to submit proof of loss prior to bringing suit as prescribed by the contract
Summary of this case from Allianz Life Ins. Co. of N. Am. v. MuseOpinion
No. 02-367-P
October 22, 2003
ORDER
Now before the court are Plaintiff's Motion for Partial Summary Judgment on the Issue of Bad Faith, and Defendants' Motion for Summary Judgment on Plaintiff's Contract and Bad Faith Claims. The two motions could essentially be classified as cross-motions for summary judgment insofar as they both address the issue of bad faith.
Walter D. Haskins, James N. Edmonds, Michael P. Atkinson, Andrew Jayne, James W. Connor, Jr., and Thomas Hird have entered appearances on behalf of Plaintiff. J. Todd Willhoite has been referred to as co-counsel in depositions taken in this case, but Mr. Willhoite has not entered an appearance on behalf of Plaintiff. Mr. Willhoite has signed pleadings in the instant case in regard to discovery requests. William W. O'Connor, John E.Dowdell, Damon N. Vocke, Gerald W. Huston, Joseph A. Hinkhouse, Scott R. Ostericher, Michael Burrage, and David A. Burrage have entered appearances on behalf of Defendants.
In general, summary judgment is proper where the pleadings depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). An issue of fact is "genuine" if the evidence is significantly probative or more than merely colorable such that a jury could reasonably return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248 (1986). An issue is "material" if proof thereof might affect the outcome of the lawsuit as assessed from the controlling substantive law.Id. at 249.
In considering a motion for summary judgment, this court must examine the factual record and reasonable inferences therefrom in the light most favorable to the party opposing summary judgment. Gray v. Phillips Petroleum Co. , 858 F.2d 610, 613 (10th Cir. 1988). Furthermore, if on any part of the prima facie case there is insufficient evidence to require submission of the case to the jury, summary judgment is appropriate. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242 (1986). In addition, one of the principal purposes of summary judgment is to isolate and dispose of factually unsupported claims or defenses, and the rule should be interpreted in a way that allows it to accomplish this purpose. Celotex Corp. v. Catrett , 477 U.S. 317, 323-24 (1986).
BACKGROUND
The basic facts of this case are undisputed. Plaintiff has been involved in three accidents which are relevant to the instant case, two traffic accidents, and one occupational injury. In 1991 Plaintiff was involved in a traffic accident, and as a result received back surgery, which included the insertion of six pedicle screws in his lower back. Plaintiff settled his workers' compensation claim (with a non-party) in an amount that totaled approximately $20,000 (with a corresponding finding that Plaintiff sustained a 15% partial permanent disability as a result of the traffic accident). Based on the accident, Plaintiff also pursued a lawsuit against the employer of the other vehicle involved in the collision, and recovered a settlement of approximately $250,000.00. Plaintiff testified he personally received $39,000.00 or 49,000.00. Plaintiff also testified he spent all of the settlement money he received during the period from 1992-1997 when he had no job.
In 1998, Plaintiff earned annual wages totaling less than $5,000.00. In early 1999 and early 2000, Plaintiff worked for different trucking companies, but failed to establish a long-term working relationship with any of them. In August 2000, Plaintiff was hired to work for Miller Truck Lines, but this work terminated when, in November 2000, Plaintiff refused to follow the instructions of his dispatcher. Plaintiff re-applied for work with Miller Truck Lines in early 2001, and was re-hired on March 2, 2001. In connection with this re-hire, Plaintiff purchased an occupational accident insurance policy (the "Fairfield Policy"), which Policy is at issue in the instant case.
On March 31, 2001 — less than a month after being re-hired — Plaintiff alleges he fell from a truck trailer and sustained injuries from that fall. There were no eyewitnesses to the accident. The same day Plaintiff went to the St. Francis Hospital emergency room in Tulsa, Oklahoma, where it was determined his right heel was fractured.
Plaintiff also made complaints of pain in his back, hip and pelvis at St. Francis Hospital. Dr. Larry Redden ordered x-rays of Plaintiff's lumbar spine and pelvic area. These x-rays did not reveal any injury to Plaintiff in those areas based on the occupational accident. Dr. Redden's written diagnosis was that of a fractured calcaneous, and his written diagnosis did not ultimately diagnose a fracture or injury to the back, hip, or pelvis. In fact, the records indicate Dr. Redden simply noted that during his physical exam of the pelvic rectal area, there was "mild pain on compression." Dr. Redden did not diagnose any permanent or long-term injury.
Dr. Redden made notations in the medical records indicating Plaintiff should not return to work until he "was released by an orthopedist." Dr. Redden also indicated "the injury warranted referral to an orthopedic surgeon." Dr. T. Boone was referenced in the discharge papers as being with the "on-call list of the day for the proper orthopedic group . . ."
After receiving emergency room treatment at St. Francis Hospital on March 31, 2001, Plaintiff requested and received a Claim Form from Mustang Claim Service ("Mustang") (the administrator Fairfield hired to handle certain claims) so that he could properly submit his claim for medical and disability benefits to Mustang. On April 3, 2001, Plaintiff completed and signed the Claim Form, which he submitted to Mustang. Mustang received the Claim Form on April 5, 2001. Along with the Claim Form, Mustang also received a signed medical authorization from Plaintiff.
On the Claim Form, Plaintiff completed the requests for information by noting "Rt. Foot" in the box titled "Part of Body Injured,' and "Fracture Heel" in the box titled "Nature of Injury." It is undisputed Plaintiff did not identify any other injury or injured part of the body on the Claim Form, even though he admits he could have. Plaintiff's counsel argues the box was too small to include other injuries, and Plaintiff was in too much pain to remember to note his hip injury.
The Fairfield Policy includes the following terms and conditions:
DISABILITY INCOME BENEFIT
How To File A Claim
If you become Totally Disabled due to an Occupational Accident that happens while covered You will be paid the benefits described above. You must be under a Physician's care while disabled.
You can get a claim form from the Participant Motor Carrier, Us or one of Our agents. The form has instructions on how to fill out and where to send it. If a claim form is asked for but not received within 15 days a claim can be filed without sending in the bills and describing the situation in a letter to Us at the address shown on the Information Page of this policy.
* * *
To claim Accident/Medical/Dental Benefits, attach copies of all bills to the claim form . . . We have the right to examine You, at Our expense, if You file a claim.
Legal Actions
Warning
We may not be sued on a health claim before 60 days after proof of loss has been given to Us.
Any person who knowingly, and with intent to injure, defraud, or deceive Us, makes any claim for the proceeds of the Policy containing any false, incomplete or misleading information may be guilty of a felony.
Likewise, the Claim Form states:
Any person who knowingly and with intent to defraud any insurance company or other person files a statement of claim containing any materially false information conceals for the purpose of misleading information concerning any fact material thereto, commits a fraudulent insurance act, which is a crime and may subject such person to criminal and civil penalties.
On April 2, 2001, Plaintiff attempted to follow the St. Francis emergency room's referral to the orthopedic surgeon, Dr. Tyler Boone of Eastern Oklahoma Orthopedic Center, ("EOOC"). Plaintiff contends he was told by EOOC that they would not accept Fairfield's insurance and he had to leave because he could not pay. Defendant alleges Cynthia Johnson of Dr. Boone's office contacted Miller Truck Lines, which authorized an initial evaluation of Plaintiff by Dr. Boone's office. The records of Dr. Boone's office indicate that "pt.[patient][was] rescheduled."
On April 3, 2001, the same date he signed the Claim Form, Plaintiff attended an initial medical appointment with Dr. William Jones, a podiatrist. Dr. Jones's bills (covering treatment from April 3, 2001 through November 6, 2001) were sent to Mustang, which Mustang paid in full. Mustang also began providing Plaintiff with medical and disability benefits (at $500.00 per week) over a seven month period, with total cash payments to Plaintiff in excess of $15,000.00.
After submitting his signed Claim Form, Plaintiff did orally complain of a "sore hip" to Mustang. Plaintiff admits that Diane Ahlfinger of Mustang told him he could see an orthopedic physician, yet Plaintiff never did so. (Ms. Ahlfinger testified she told Plaintiff to see the physician in early June 2001; Plaintiff, however, cannot remember the date he was told to do this). Ms. Ahlfinger's file notes also indicate complaints regarding hip pain on April 10, 2001 and June 5, 2001. Ms. Ahlfinger testified she authorized Plaintiff to see an orthopedic physician to determine whether Plaintiff had such an injury, yet Plaintiff never went to see an orthopedic physician.
Dr. Jones did not note or chart any complaints by Plaintiff for back, or hip problems until October 2001. Plaintiff agrees Dr. Jones is merely a podiatrist and is not licensed to treat any other part of the body other than the foot. (Plaintiff's Motion for Partial Summary Judgment on the Tort of Bad Faith at 4, undisputed facts nos. 18 and 20). "Dr. Jones has never treated anything other than the foot . . . Because he can only treat the foot, Dr. Jones testified he makes it a practice not to document a patient's complaints regarding other areas of the body, so as not to give the impression that he is treating anything other than the foot." Id. Further, Dr. Jones's office completed a handicap parking application for Plaintiff, noting as the reasons for doing so "fx [fracture] rt calcaneous [heel]; arthritis of the back." Dr. Jones released Plaintiff from his care November 6, 2001, on a form he sent to Mustang titled "Work Release." Dr. Jones has not treated Plaintiff since this date. Dr. Jones also referred Plaintiff to Dr. Luessenhopm an orthopedic physician, due to Plaintiff's complaints of a sore hip (and ankle and/or knee). Dr. Jones made no indication on that form or any other of any continuing injury to Plaintiff's foot, or that he could do anything further to treat Plaintiff's foot, or that he was referring Plaintiff to someone else for further treatment to the foot, but rather referenced "knee and hip complaints." Moreover, Plaintiff filed the instant case based upon a single alleged physical injury — to his "hip"; the Complaint makes no mention of his foot. Further, because Dr. Jones admits he is not licensed to treat anything other than Plaintiff's foot, his referral to Dr. Luessenhopm was based merely on Plaintiff's complaints, not on a medical diagnosis.
Dr. Brian C. Howard, Plaintiff's medical expert, does not cite to any objective medical evidence to prove Plaintiff has a continuing injury based upon the occupational accident in March 2001. In fact, Dr. Howard cannot testify as to what, if any, treatment he would recommend for Plaintiff. Further, Dr. Howard testified he does not specialize in the spine, and no longer handles spine surgeries because other specialists in his practice perform them. Finally, Dr. Howard admits Plaintiff does not have a total or permanent disability and testified Plaintiff could work as a clerk, or in other types of jobs.
The Fairfield policy does not define "disability" based upon any particular occupation once there have been 52 weeks of disability. After the 52 weeks, the policy would cover Plaintiff for disability only if he met two requirements. One, he could not be engaged in any work for pay or profit and two, he must have been unable to perform all of the substantial and material duties of any occupation or employment, which he was qualified for by reason of education or experience.
Defendant's medical experts, Drs. Mark Hayes, (a spinal orthopedic M.D.) and Dr. E.P. Couch have provided medical opinions conclusively ruling out any continuing occupational injury to Plaintiff.
November 13, 2001 notes in Ms. Ahlfinger's file indicate she denied Plaintiff's claim for continued disability payments because: (1) Plaintiff's Initial Claim Report stated he had only an injury to his heel and right foot; (2) if there were continuing problems with his knee or hip, Plaintiff had had almost 8 months to have those problems addressed, and (3) she was relying on Dr. Jones's Release from Care.
On November 26, 2001, upon learning that Fairfield denied benefits, Dr. Jones wrote to Mustang and informed Mustang it should review the original emergency room medical records. Plaintiff testified he never received a response from Mustang concerning Dr. Jones's November 26, 2001, letter.
Plaintiff signed a medical release for counsel in the instant case on January 9, 2002. On January 10, 2002, Plaintiff wrote Mustang asking that his claim be reconsidered. On January 11, 2002, Plaintiff's counsel, although not formally retained, sent a letter and medical release to Dr. William Jones and Dr. Joseph E. Mitchell both with the caption, "Garrett v. Fairfield Ins. Co., et al." Plaintiff formally retained counsel in this case on January 14, 2002.
The Complaint was filed on July 2, 2002. Plaintiff received arbitration forms which were sent to him per his request on July 15, 2002. Plaintiff states it would have cost substantial sums of money to arbitrate. Defendant contends the fees may be waived or arbitrators may serve on a pro bono basis. At any rate, Plaintiff was represented by two different law firms at this point in time.
Plaintiff had previously signed a contingency contract with J. Todd Willhoite in order to pursue a claim against State Farm on August 27, 2001.
The third relevant accident involving Plaintiff occurred on August 8, 2001 (approximately 4 months after his occupational accident). Plaintiff was driving his brother-in-law's (Richard Wise) truck with his sister, Rita Wise. At approximately 11:30 p.m., Plaintiff was stopped at a red light. Plaintiff was then hit from behind by a vehicle driven by Joseph Bouchie, an insured of State Farm Insurance Company. Plaintiff described the collision as a "fender-crack" because some fiber glass chipped off the back of the truck. Plaintiff stated the truck slid 12-18 feet. Mr. Bouchie testified the vehicle did not move upon impact. Plaintiff claims he deferred to Mr. Bouchie as to whether to obtain a police report. Mr. Bouchie testified that Plaintiff was insistent that no police report be obtained. No police report was obtained, and Plaintiff indicated that he was alright, had no injuries, and drove off.
On August 10, 2001, however, Plaintiff and his sister checked into the Claremore Regional Hospital emergency room because of injuries they claim to have sustained from the rear-end collision. Dr. Francis C. Eaton examined Plaintiff.
The records from the Claremore emergency room and Dr. Francis Baton's testimony reveal Plaintiff failed to note any hip problem or pain in the past medical history section of the admission forms. The only thing Plaintiff described in this section was his previous back surgery in 1991. Dr. Eaton has testified that he had no independent recollection of examining Plaintiff on August 10, 2001 at the emergency room. If Plaintiff had mentioned any serious problem to his hip, however, Dr. Eaton testified he would have x-rayed that area, and he did not. Dr. Eaton testified that he would have expected Plaintiff to tell him about a serious hip problem or serious hip pain when they were taking down Plaintiff's "past history," a "standard emergency department inquiry."
Contradicting Dr. Baton's testimony, Plaintiff testified in the instant case that he specifically told Dr. Eaton about the March 31 occupational accident and that he was "still limping pretty good on my foot . . . and was still using a cane."
Dr. Eaton testified he could not recall whether Plaintiff had a limp. However, Dr. Eaton also testified that the emergency room nurse noted that Plaintiff "ambulated to the room," and that if he saw a limp, he would have "charted" it on the "medical forms, and that "if the patient is limping, we — would have noted that." Dr. Eaton made no notation of any limp by Plaintiff.
Dr. Eaton further testified that the triage sheet or intake form requested history of present pain, and the form states Plaintiff complained of right hip pain (the same part of the body Plaintiff claims was injured in the occupational accident on October 31, 2001).
Dr. Eaton palpatated Plaintiff's hips, noting they were non-tender, diagnosed Plaintiff with cervical and lumbar strains as a result of the motor vehicle accident. Dr. Eaton testified Plaintiff should be able to resume normal activities within a week or two. Dr. Eaton checked Plaintiff's hips and did not discover any problem.
Following his emergency room visit to Claremore Regional Hospital, Plaintiff began chiropractic treatment with Dr. Joseph Mitchell, a chiropractor, on August 24, 2001, which continued through November 23, 2001. These records include, "Acute Low Back Pain Disability Questionnaires" that Plaintiff prepared and signed, Analogue Pain Scale indicating "constant" and "moderate" pain to the "lower back" and "hips," and "low back pain — both sides radiating to hips."
On August 27, 2001, three days after his initial visit to Dr. Mitchell, Plaintiff retained attorney J. Todd Willhoite to pursue a claim against State Farm, and signed a contingency fee agreement on that date.
On December 7, 2001, Mr. Willhoite wrote to State Farm with a caption referencing "Date of Accident: August 8, 2001", and stating: "As a direct result of the impact of the collision, Marvin Garrett suffered injuries to his neck, lumbar back, right hip, and experienced headaches. Attached are medical records of Claremore Regional Hospital which states he complained of moderate neck pain, right hip pain, and his back . . . Further attached are the medical records of Dr. Mitchell which state Plaintiff had severe pain in his neck and shoulders; back pain on both sides with it radiating into his hip . . ."
On February 11, 2002, Mr. Willhoite sent a letter to State Farm, enclosing a letter dated February 8, 2002 from Dr. Mitchell. Mr. Willhoite specifically notes that the injuries to Plaintiff from the car accident "will interfere with his occupation." Dr. Mitchell's letter states that "Mr. Garrett sustained a much more severe lower back injury because of the previous surgery and, as a result, has required more treatment than would otherwise be necessary . . . Mr. Garrett will not make a full recovery . . . Mr. Garrett continues to experience some radicular pain to the lower extremities . . . I would expect that the above problems would result in some disability in his case. Because he is a truck driver/ the back injury would interfere with his ability to sit for long periods of time while operating the truck."
From October 3, 2001 through January 17, 2002, Plaintiff participated in the Tri-City League bowling league at Country Club Lanes in Claremore, Oklahoma. This league was held on Thursday evenings.
Plaintiff never told Mustang or Defendants that he was bowling during this period of time. In fact, Plaintiff infatically denied, under oath, that he had participated in bowling activities after his March 31, 2001 accident. Plaintiff later recanted that testimony following a break in his deposition when he had an opportunity to speak with his lawyers. Plaintiff's deposition testimony reflects:
Q: Okay. Is it possible that you've bowled since March 31, 2001?
A. I don't recall bowling. I was too hurt. I couldn't even hardly walk. Wouldn't be no sense in bowling.
Plaintiff actually bowled 42 full games during this 14-week period, with high scores of 256, 246, and 237. Plaintiff's 42 game average score was 197. Further, during this segment of time Plaintiff was simultaneously pursuing insurance claims against Fairfield as well as State Farm based on the same injuries (but not telling one about the other and telling neither about the bowling activities).
On January 10, 2002, Plaintiff wrote, what defendants characterize as a "desperation letter" to Ms. Ahlfinger at Mustang. This letter states, among other things: "[O]n 3-31-2001 . . . I injured my foot+leg+hip and lower back . . . I walk with a limp . . . I did not have the money to pay up front to get treatment . . . I can not afford medical care on my own . . . I have no way of getting the medical care I need . . . I am unable to work . . ." Plaintiff concluded with the following "P.S. if you would start where you left off last November that would help me [get] back some way of survival until I [get] medical treatment."
The evening of January 10, 2002, the same day Plaintiff wrote the desperation letter, he bowled three full games with scores of 191, 204, and 166. Plaintiff said nothing in his "desperation letter" about the bowling, or that he in fact had received medical evaluations and treatment from the Claremore Regional Hospital emergency room on August 10, 2001, or from Dr. Mitchell from August 24, 2001 through November 23, 2001. Nor did Plaintiff tell Mustang that just the day before, January 9, 2001, he had signed a medical authorization for "my [Marvin Garrett's] lawyer: Walter D. Haskins." Nor did Plaintiff tell Mustang that he was also being represented by Todd Willhoite, and was pursuing an insurance claim against State Farm involving injuries he represented to State Farm as being the "direct result" of the rear-end collision concerning his "neck, lower back, [and] right hip."
July 2, 2002 Plaintiff filed a Complaint in the instant case alleging breach of contract and bad faith due to Defendant's failure to continue his disability policy due to an alleged hip injury. Defendants have filed a counterclaim for fraud.
The following is a summary of the background of this case in a "timeline" format:
Timeline
1991 Automobile accident; back surgery which included insertion of six pedicle screws; settled workers' compensation claim and lawsuit against driver of other vehicle.
1992-97 Plaintiff unemployed
1997-98 Plaintiff earned wages totaling less than $5,000.
1999-00 Plaintiff worked for various trucking companies.
8-00 Plaintiff hired by Miller Truck Lines.
11-00 Plaintiff terminated for failure to follow instructions of dispatcher.
3-2-01 Re-hired by Miller Truck Lines, purchased policy at issue in the instant case.
3-31-01 Occupational Accident/ fractured heel
3-31-01 St. Francis / Dr. Redden / no written diagnosis of fracture or injury to the back, hip or pelvis. Plaintiff was referred to Dr. T. Boone.
4-2-01 Plaintiff reports to Dr. Boone's Office.
4-3-01 Initial Claim / Plaintiff completes medical authorization. Plaintiff completes request for information by noting "Rt. Foot" in the box titled "Nature of Injury."
4-3-01 Plaintiff reports to Dr. Jones' Office.
4-9-01 Letter from Mustang advising Plaintiff Mustang needed all medical bills and reports relating to his injury so that Mustang could make a determination regarding benefits and/or to properly handle his claim.
4-10-01 Plaintiff had conversation Diane Ahlfinger (mentioned hip pain — Ms. Ahlfinger states Plaintiff was authorized to seek hip treatment — Plaintiff admits he was so authorized, but does not remember date.)
6-5-01 Ms. Ahlfinger's hand-written File Notes state: Parti cld re rt hip pain; asked if he can ask Dr about pain. I told him he can ask, but needs see orth; dpm can't treat hip pain. He mention to Dr. advise.
6-11-01 " " "
6-29-01 " " " Per Defendant — Plaintiff told Ms. Ahlfinger hip was fine.
8-1-01 Mustang extended disability to 8-1-01.
8-8-01 Auto accident (approx 3 mo. treatment by Dr. Mitchell).
8-10-01 Plaintiff and sister check into Claremore Regional Hospital. Plaintiff does not inform Dr. Eaton of occupational accident, but notes 1991 back surgery. Diagnosed with cervical and lumbar strains as a result of the motor vehicle accident. Dr. Eaton found that Plaintiff should be able to resume normal activities within a week or two.
8-24-01 Plaintiff began chiropractic through treatment with Dr. 11-23-01 Joseph Mitchell.
8-22-01 Dr. Jones's office calls wants to order ortho inserts to hold foot in place. Defendant makes $300.00 payment.
8-27-01 Plaintiff signs contingency contract with attorney, Todd Willhoite re: claim against State Farm.
9-18-01 Mustang received continued off-work notice from Dr. Jones waiting for ortho device. Next office visit 10-9-01.
10-4-01 Bowling League (* dates through Plaintiff bowled). 1-17-01
10-4-01 *
10-18-01 *
10-11-01 *
10-16-01 Phone call from Plaintiff to Mustang, should be released to work next office visit with Dr. Jones, 11-6-01.10-25-01 *
11-6-01 Letter from Dr. Jones to Mustang entitled Work Release, states "Released from my care on 11-6-01 and referred to Dr. Lussenhoff for follow up care for knee and hip complaints."
11-12-01 (Less than 6 days after being released by Dr. Jones) — Medical release signed from Plaintiff to attorney, Todd Willhoite.
11-26-01 Dr. Jones's letter to Mustang requesting Mustang to review original emergency room records.12-6-01 *
12-7-01 Demand letter to State Farm from attorney Willhoite stating Plaintiff's injuries to lower back and hip were the direct result of rear end collision and would adversely affect his occupation as a truck driver.12-20-01 *
12-27-01 *
1-9-02 Medical release from Plaintiff to counsel in the instant case, Walter D. Haskins. (Defendants contend this is a lawyer-driven bad faith action based in part on counsel's 6 month delay after this release was signed to file the instant case.)
1-10-02 "Desperation Letter" from Plaintiff to Defendant requesting Defendant to reconsider the denial of his disability policy and claiming he could not obtain medical care and was totally disabled. (*Bowled 3 games same day.)
1-11-02 Plaintiff's counsel sent a letter and medical release to Plaintiff's podiatrist, Dr. William Jones with the caption "Garrett v. Fairfield Ins. Co., et al."
1-11-02 Plaintiff's counsel sent a letter and medical release to Dr. Joseph E. Mitchell, the chiropractor who treated Plaintiff following his August 8, 2001, automobile accident, with the caption "Garrett v. Fairfield Ins. Co., et al."
1-14-02 Contingency Contract with attorney Walter D. Haskins.
2-8-02 Letter Dr. Mitchell to Willhoite stating Plaintiff sustained a much more severe injury to lower back because of previous (1991) surgery, and will not make a full recovery.
2-11-02 Letter Willhoite sent to State Farm noting injuries Plaintiff sustained in car accident "will interfere with his occupation."
3-12-02 Settlement check from Willohite re: auto accident 8-8-01.
7-2-02 Instant case filed Eastern District. Plaintiff claims he was denied disability due to injury to his right hip during March 31, 2001 occupational accident. Plaintiff's counsel does not reveal the August 8, 2001 automobile accident and later affirmatively represents to opposing counsel and this court during discovery that the August 8, 2001 accident is not relevant because Plaintiff injured a different part of his body. However, the record reveals Plaintiff's counsel had requested medical records from Dr. Joseph E. Mitchell, the chiropractor who treated Plaintiff following his August 8, 2001 automobile accident, as early as January 11, 2002. These records would have revealed that Plaintiff was claiming an injury to his right hip due to the August 8, 2001 automobile accident.
7-15-02 Patient sent arbitration forms per his request.Discussion
"The more recent decisions of the Oklahoma Supreme Court characterize the bad faith/breach of contract action as a single cause of action with component elements and multiple potential bases for damages." Peters v. American Income Life Insurance Co., 2002 WL 32140122, (Okla.Civ.App. June 4, 2002) cert. denied May 12, 2003, citing Taylor v. State Farm, 981 P.2d 1253, 1257-58 (Okla. 1999). The first element of proving a bad faith cause of action requires Plaintiff to prove he or she has a valid claim. See Christian v. American Home Assurance Co., 577 P.2d 899, 903 (Okla. 1978) ("we find the obligation of an insurer to its insured upon proper presentation of a valid claim under a disability policy, is not limited to the payment of money only"). "Plaintiff obviously must establish that a binding agreement has been breached to invoke bad faith." Expertise Inc. v. Aetna Finance Co., 810 F.2d 968, 972 (10th Cir. 1987). "A determination of liability under the contract is a prerequisite to recovery for bad faith breach of an insurance contract." Davis v. GHS Health, 22 P.3d 1204, 1210 (Okla. 2001). Plaintiff must prove "[The insurer] was required under the insurance policy to pay [Plaintiff's] claim." Oklahoma Uniform Jury Instructions, Bad Faith — First Party Insurance — Failure to Pay Claim of Insured, 22.2.
It is possible to interpret Plaintiffs Complaint as alleging 2 separate causes of action for breach of contract and the tort of bad faith. Specifically, Plaintiff alleges Defendants are "contractually obligated to Plaintiff . . ." Further, Plaintiff alleges "Defendants' failure to pay their policy proceeds has been in violation of their duty to act in good faith, or alternatively, has been an act of bad faith on their part." (Plaintiffs Complaint at 5). In any event, the analysis undertaken by this court encompasses both causes of action.
In the instant case, Plaintiff has not established he has a valid claim under the contract. The disability contract at issue in the instant case required Plaintiff to submit a proof of loss or supporting medical evidence to support a claim for continuing total and permanent occupational disability at least 60 days prior to Plaintiff pursuing any legal action against Defendants. In this regard, Plaintiff never submitted a claim form, any medical bill, expense, or invoice to Mustang indicating he had or has any injury other than a fracture to the right heel.
The undisputed medical evidence, including Plaintiff's own expert, Dr. Brian C. Howard, further demonstrates that Plaintiff has never presented, and cannot present, any proof of loss or supporting medical evidence to establish a continuing and permanent occupational disability to his hip as required under the policy.
Plaintiff first complained of pain in his back, hip and pelvis at St. Francis Hospital immediately following the March 31, 2001 occupational accident. Dr. Larry Redden ordered x-rays of Plaintiff's lumbar spine and pelvic area. These x-rays did not reveal any injury to Plaintiff in those areas based on the occupational accident. Dr. Redden's written diagnosis was that of a fractured calcaneous, and his written diagnosis did not ultimately diagnose a fracture or injury to the back, hip, or pelvis. In fact, the records indicate Dr. Redden simply noted that during his physical exam of the pelvic rectal area, there was "mild pain on compression." Dr. Redden did not diagnose any permanent or long-term injury.
Further, Dr. Mark Hayes confirmed in his deposition testimony that Plaintiff is not suffering from any significant pathology or back problems that would require either treatment or surgery. Likewise, Dr. E.P. Couch opined that Plaintiff does not suffer any injuries today from his occupational accident on March 31, 2001.
Finally, the Claremore Emergency Room records and Dr. Eaton's testimony confirm that Plaintiff has no valid contract claim. Dr. Eaton examined Plaintiff, 4 full months after Plaintiff's occupational accident, and found no injury to Plaintiff's hip due to the occupational accident. In fact, Plaintiff did not even mention the occupational accident in the past medical history section on the admission forms, but did describe his previous back surgery in 1991.
Finally, contrary to Plaintiff's assertions, he was able to and in fact did obtain medical care for his back and hip from Claremore Regional Hospital on August 10, 2001 and Dr. Mitchell from August 24, 2001 through November 23, 2001. Thus, Plaintiff's contention that he could not get medical care in order to submit a proof of loss is unfounded. Therefore, Plaintiff has failed to meet his obligation under the contract to submit any proof of loss concerning his alleged hip injury as required under the Fairfield policy.
Another clause in the disability contract states and requires: "If you become totally disabled due to an Occupational Accident that happens while covered, You will be paid the benefits described below. You must be under a Physician's care while disabled." (emphasis added). There is no evidence the alleged hip injury of which Plaintiff complains was a result of the occupational accident. To the contrary, Plaintiff and Plaintiff's counsel have affirmatively represented to this court, opposing counsel, and State Farm Insurance Company that Plaintiff's hip injury was due to an August 8, 2001 automobile accident.
The only area of the body which forms the basis of Plaintiffs Complaint is his hip. Plaintiffs unequivocal position during the discovery phases of this litigation was that the automobile accident for which he obtained the State Farm Settlement "had nothing to do with the occupational accident for which [he is] making the claim against the Defendant." Plaintiff strenuously opposed discovery in this regard as evidenced by several pleadings wrought with similar inconsistent statements:
"The documents requested in the Subpoena are not relevant and not reasonably calculated to lead to the discovery of admissible evidence as a matter of Oklahoma law, because the documents relate to different parts of the body." Objection of J.Todd Willhoite to Subpoena in a Civil Case, at p. 2 (filed March 17, 2003)( Signed by Plaintiff's attorney, J. Todd Willhoite). Mr. Willhoite admitted in his deposition that he did not advise State Farm of Plaintiffs alleged workplace injury, and when pressed, could only state there were no "direct lies" in the demand letter to State Farm.
"It is outrageous for these Defendants to claim that chiropractic treatment for injuries to different areas of the body are relevant when the Defendants . . ." Plaintiffs Response and Objection to Defendants* Motion to Compel Attorney J. Todd Willhoite to Produce Wrongfully Documents in Response to Subpoena and for Sanctions Under Rule 11, at p. 17 (filed April 4, 2003) (Signed by Plaintiff's attorneys in the instant case).
"I never told any officer, director, or employee of the Defendant or of Mustang Claims Service about the August 10, 2001 visit to Claremore Regional Hospital in that it was treatment for an accident which was clearly not an occupational accident, was not treatment for the occupational accident of March, 2001, was not one for which I was making claim against Defendants, and that it had nothing to do with the occupational accident for which I was making claim against the Defendants which preceded my auto accident by some four months. Plaintiffs Response to Defendant National Reinsurance Corporation's First Set of Request to Admit, Response to Request No. 8 (served April 14, 2003)( Signed by Plaintiff's attorneys in the instant case and verified by Plaintiff).
"[M]y accident of August 8, 2001, did not involve injuries for which I was making claims against these Defendants arising from the occupational accident of March 31, 2001." Plaintiffs Response to Defendant National Reinsurance Corporation's First Set of Requests to Admit, Response to Request No. 40 (served April 14, 2003)( Signed by Plaintiffs attorneys in the instant matter and verified by Plaintiff).
Plaintiff was diagnosed, treated and released from care by Dr. Jones due to a fractured heel.
The Claremore Hospital emergency room records and those of Dr. Francis Eaton reflect that Plaintiff was diagnosed with a lumbar and cervical strain due to the August 8, 2001 accident. Dr. Eaton testified Plaintiff failed to note the occupational accident at all, but instead indicated any injury to his hip was due to the August 8, 2001 automobile accident.
Further, Plaintiff's counsel, Todd Willhoite, wrote at least 2 letters to State Farm on December 7, 2001, and February 11, 2002, unequivocally stating Plaintiff's hip injury was due to the August 8, 2001 automobile accident. Therefore, Plaintiff has failed to prove any alleged hip injury was due to the occupational accident.
Finally, Plaintiff has not demonstrated, as required by the policy, that he is unable to work. To the contrary, the undisputed evidence clearly reflects Plaintiff had the physical ability to actively participate in a bowling league which nullifies all conclusions except Plaintiff was able to work.
Further, the Fairfield policy does not define "disability" based upon any particular occupation once there have been 52 weeks of disability. After the 52 weeks, the policy would cover Plaintiff for disability only if he met two requirements: (1) he could not be engaged in any work for pay or profit;(2) he must have been unable to perform all of the substantial and material duties of any occupation or employment, which he was qualified for by reason of education or experience. Dr. Brian C. Howard, Plaintiff's medical expert has testified Plaintiff does not have a total or permanent disability because he could find work as a clerk, or in other types of jobs. Therefore, Plaintiff has failed to comply with the terms of the contract and cannot prove he has a valid claim under the contract.
Even assuming Plaintiff could prove he had a valid claim under the contract, which he cannot, the second element of a bad faith cause of action requires Plaintiff to prove the insurer's refusal to pay a claim was unreasonable under the circumstances. The bad faith tort was recognized in Christian v. Am. Home Assurance Co., 577 P.2d 899, 904-05 (1977). There the Court adopted the rule that an insurer has an implied duty to deal fairly and act in good faith with its insured and that the violation of this duty gives rise to an action in tort for which consequential damages and, in a proper case, punitive damages may be awarded. Tort liability may only be imposed where there is a clear showing that the insurer unreasonably and in bad faith, withholds payment of its insured's claim.
In Christian, elements of willfulness, malice, and oppression entered into the circumstances. The acts of the insurer were directed specifically toward the insured in an effort to avoid responsibility and conceal facts. As the Court described in McCorkle v. Great Atlantic Ins. Co., 637 P.2d 583, 587 (Okla. 1981), the tort of bad faith is based on "the insurer's unreasonable, bad-faith conduct" including the unjustified withholding of payment. Negligence, on the part of the insurer, will not support a claim for bad faith. Peters v. American Income Life Insurance, 2002 WL 32140122 (Okla.Civ.App. June 4, 2002), cert. denied May 12, 2003. Therefore, under theChristian line of authority, the tort of bad faith does not foreclose the insurer's right to deny a claim, resist payment, or litigate any claim to which the insurer has a legitimate defense.Buzzard v. Farmers Ins. Co., 824 P.2d 1105, 1109 (1991). The essence of the tort is the unreasonableness of the insurer's actions, and the withholding of payment must be "unjustified." McCorkle, 637 P.2d at 587.
In the instant case, the court finds the actions of the insurer were reasonable and justified. Faced with an opposite factual scenario as that in Christian, wherein it is the insured who attempts to avoid responsibility and conceal facts, the adjuster in this case based her decision on three documented factors: (1) Plaintiff's Initial Claim Report stated he had only an injury to his heel and right foot; (2) if there were continuing problems with his knee or hip, Plaintiff had months to have those problems addressed, and (3) reliance on Dr. Jones's Work Release.
It is undisputed Plaintiff completed the Claim Form request for information by noting "Rt. Foot" in the box titled "Part of Body Injured," and "Fracture Heel" in the box titled "Nature of Injury." It is also undisputed Plaintiff did not identify any other injury or injured part of the body on the Claim Form, even though he admits he could have. It was reasonable for the adjuster to have relied on Plaintiff's own designation of his injury.
Dr. Jones released Plaintiff from his care November 6, 2001, on a form he sent to Mustang titled "Work Release." Dr. Jones made no indication on the Work Release, or any other form, of any continuing injury to Plaintiff's foot, or that he could do anything further to treat Plaintiff's foot, or that he was referring Plaintiff to someone else for further treatment to the foot. Dr. Jones has not treated Plaintiff since November 6, 2001.
Although Dr. Jones referred Plaintiff to a specialist, Plaintiff concedes Dr. Jones was not qualified to make such a referral. (Plaintiff's Motion for Partial Summary Judgment on the Tort of Bad Faith at 4, undisputed facts nos. 18 20). Further, because Dr. Jones admits he is not licensed to treat anything other than Plaintiff's foot, his referral to Dr. Luessenhopm was based merely on Plaintiff's complaints, not on a medical diagnosis.
Because the disability policy requires Plaintiff be unable to work, it was reasonable for the adjuster to terminate benefits when Plaintiff was released to work. By all accounts, Plaintiff was able to work as of November 6, 2001 when he was released by Dr. Jones.
Further, as early as August 10, 2001, the records from Claremore emergency room following the August 8, 2001 traffic accident, and Dr. Baton's records from that date merely diagnose a cervical and lumbar strain due to the August 8, 2001 accident, and predict Plaintiff "should be able to resume normal activities within a week or two." Plaintiff did not make demand for continued benefits from Mustang until November 2001.
Dr. Hayes confirmed that Plaintiff is not presently suffering from any significant pathology or back problems that would require either medical treatment or surgery. In this regard Dr. Hayes testified:
A. Does he have a back problem that needs medical treatment? No, he does not. Has he had surgery? Yes. Does he need any more surgery? No. Does he need to see a physician for his complaints? No.
In short, there is no evidence in the record supporting Plaintiff's claim that he was under a physician's care after November 6, 2001, when he was released by Dr. Jones, or that he should have been under a physician's care after that date. Defendant has paid all medical and disability benefits Plaintiff was entitled to receive in connection with the injury to his foot. Accordingly, the court finds there was no bad faith on the part of the insurer because the Defendant's actions were reasonable and justified based on the relevant undisputed record before the court.
In any event, Defendant is entitled to litigate a dispute with its insured if there is a `legitimate dispute' as to coverage or the amount of the claim. Timberlake Construction Co. v. U.S. Fidelity and Guaranty Co., 71 F.3d 335, 343 (10th Cir. 1995). Plaintiff argues however, Defendant is not entitled to this defense because Defendant was not aware of the dispute "at the time the performance was requested," because Defendant made an inadequate investigation into Plaintiff's claim. See Buzzard v. Farmers Ins. Co., Inc., 824 P.2d 1105, 1109 (Okla. 1992).
Plaintiff's position is inconsistent with Oklahoma law and would establish an unrecognized (and unconscionable) public policy — allowing an insured to actively conceal material facts from his insurer "at the time performance is requested" and use that concealment as a sword in a subsequent bad faith lawsuit. Even in cases cited by Plaintiff, such a position has been implicitly, if not overtly, rejected. See Timberlake, 71 F.3d at 345, 347 ("insured must make a showing that material facts were overlooked or that a more thorough investigation would have produced relevant information" and finding insurer's "further investigation would have produced nothing of consequence"); Roberts v. State Farm Mut. Auto Ins. Co., No. 02-7052, 2003 WL 1559155, at *3-4 (10th Cir. (Okla.) March 26, 2003) (affirming grant of partial summary judgment for insurer and rejecting insured's argument that insurer's failure to seek additional information concerning the insured's claim, including a narrative report, constituted bad faith, where medical information received by insurer "gave absolutely no indication that [the insured] was at risk of developing any of the problems his experts now claim are likely to occur"); Willis v. Midland Risk Ins. Co., 42 F.3d 607, 613 (10th Cir. 1994) (reasonableness must be considered "in light of what the insurer knew or should have known").
Therefore, Plaintiff must prove that material facts were overlooked by Defendant, and that a more thorough investigation would have produced relevant information. A more thorough investigation in the instant case would not have revealed Plaintiff was disabled or entitled to medical benefits. A more thorough investigation would have revealed the following:
* At the time performance was requested from Mustang in November 2001 — Plaintiff was actively pursuing another lawsuit in which he was claiming damages for the same injuries he is alleging in this case.
* Plaintiff never informed State Farm either that his injuries were merely an aggravation of injuries he had from the occupational accident, or that he was already totally and permanently disabled (as he now contends) thus eliminating any possible impact from the automobile accident on his occupation.
* In regard to Mustang, Plaintiff first concealed from them the August 8, 2001, automobile accident, resulting treatment (including the Claremore emergency room records and prognosis), and State Farm recovery, even though in his January 10, 2002 "desperation letter" Plaintiff represented to Mustang that he was unable to get any medical care.
Plaintiff also said nothing in his desperation letter about the bowling league, or that he in fact had received medical evaluations and treatment from the Claremore Regional Hospital emergency room on August 10, 2001, or from Dr. Mitchell from August 24, 2001 through November 23, 2001. In fact, the very evening he wrote the desperation letter, Plaintiff bowled three full games. Nor did Plaintiff tell Mustang that just the day before, January 9, 2002, he had signed a medical authorization for "my [Marvin Garrett's] lawyer: Walter D. Haskins." Nor did Plaintiff tell Mustang that he was being represented by Todd Willhoite, and was pursuing an insurance claim against State Farm involving injuries he represented to State Farm as being the "direct result" of the rear-end collision concerning his "neck, lower back, and right hip."
* Once asked for those records in discovery in this case, Plaintiff and counsel refused and represented to Defendants and the Court that these records were not relevant because they "relate to different parts of the body." Plaintiff then directly contradicted those representations by testifying that the injuries in question concerning the State Farm claim were in fact directly related as an "aggravation" or "agitation" of injuries arising from the occupational accident of March 31, 2001.
* Finally, Plaintiff told neither State Farm nor Mustang that he was able to regularly bowl (right-handed with a 14-15 pound ball) (thus directly impacting his lower back and right hip) with consistently high scores at the same time he was pursuing two separate insurance claims with each of the respective companies for injuries to Plaintiff's right hip.
Plaintiff has simultaneously pursued two separate insurance claims against two separate insurers based on mutually inconsistent representations and not telling one about the other. Plaintiff thereby violated his obligations to those insurers, failed to comply with Mustang's April 9, 2001 request for information, and violated Oklahoma law, which requires that he provide truthful and complete information in connection with those two insurance claims, and information that was not deceptive or misleading.
Contrary to Plaintiff's contentions, Oklahoma law, the "Warning" in the Fairfield Policy, and the State Farm release he signed establish an affirmative obligation on his part to be truthful, and not misleading or deceptive in connection with his respective and concurrent insurance claims to State Farm and Mustang. See First Bank or Turley v. Fid. Deposit Ins. Co. of Maryland, 928 P.2d 298, 308-09 (Okla. 1996) (recognizing that an insured's failure to provide information critical to the insurer's consideration of the claim may "serve as a defense to defeat liability or . . . to reduce recovery.");United Servs. Auto Ass'n v. McCants, 944 P.2d 298, 301 (Okla. 1997) (finding that "in Oklahoma it is a criminal offense to present a fraudulent claim to an insurer") (citing Okla. Stat. Ann. tit. 21, § 1662). The court finds Plaintiff's failure to provide information critical to Defendant's evaluation of his claim made it "entirely impossible for [Defendant] to discharge its duty under the contract, and serves as an absolute defense against liability (i.e., as in toto defense)."Turley, 928 P.2d at 308.
Accordingly, Defendant's Motion for Summary Judgment on Plaintiff's Contract and Bad Faith Claims is granted. Plaintiff's Motion for Partial Summary Judgment on Defendant's Bad Faith Claim is denied.