Opinion
No. CV 00-1956-PHX-JAT
March 26, 2003
ORDER
Pending before this Court are Defendant North Star's Motion for Summary Judgment, Defendant Birmingham's Motion for Summary Judgment, Plaintiff's Motion for Reconsideration of the Order granting partial summary judgment on some claims in favor of Defendant North Star, a Motion to Strike, a Motion to Extend Time to File Expert Report, and a Motion to Sever.
I. STANDARD FOR SUMMARY JUDGMENT
Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to summary judgment as a matter of law." Fed.R.Civ.P. 56(c). Thus, summary judgment is mandated, ". . . against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Initially, the movant bears the burden of pointing out to the Court the basis for the motion and the elements of the causes of action upon which the non-movant will be unable to establish a genuine issue of material fact. Id. at 323. The burden then shifts to the non-movant to establish the existence of material fact. Id. The non-movant "must do more than simply show that there is some metaphysical doubt as to the material facts" by "com[ing] forward with `specific facts showing that there is a genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (quoting Fed.R.Civ.P. 56(e)). A dispute about a fact is "genuine" if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The non-movant's bare assertions, standing alone, are insufficient to create a material issue of fact and defeat a motion for summary judgment. Id. at 247-48.
II. FACTUAL BACKGROUND
As of 1998, Plaintiff was employed by Defendant North Star. On March 7, 2000, Plaintiff was injured while on the job. On March 13, 2000, Plaintiff was terminated by Defendant North Star. Defendant North Star contends that such termination was a result of Plaintiff falsifying her report regarding the circumstances of the accident which caused her injury on March 7, 2000. Plaintiff disputes that she falsified her report and instead claims that her termination was the result of various forms of discrimination.
On April 4, 2000, Plaintiff filed a charge with the EEOC against Defendant North Star. Defendant North Star does not dispute that the EEOC issued a right to sue letter.
At all times relevant to this case, Defendant Birmingham was the worker's compensation carrier of Defendant North Star and Crawford was the third party claims administrator. Doc. #11, ¶ 32. After her injury on March 7, 2000, Plaintiff applied for benefits with Birmingham. Birmingham denied Plaintiff's request for benefits on April 4, 2000. Plaintiff contested the denial and requested a worker's compensation hearing. The hearing resulted in an award of benefits in Plaintiff's favor on August 31, 2000. Thereafter, Birmingham paid benefits.
The Court notes that the caption of the complaint reflects that Defendant Birmingham is c/o Crawford. The Court is unclear what this designation means. Further, the Court notes that Lewis Roca states that they are attorneys for Birmingham Fire Insurance Company. Nonetheless, Plaintiff captioned her response to Binningham's Motion for Summary Judgment as a response to Crawford's Motion for Summary Judgment. Based on the statements at oral argument, Crawford is not a party to this action. Further, apparently Birmingham is not objecting to being noticed do Crawford, to the extent this is what the caption reflects. Accordingly, the Court will treat Birmingham and North Star as the only Defendants in this case.
III. DISCUSSION
A. NORTH STAR'S MOTION FOR SUMMARY JUDGMENT
1. CLAIMS RAISED IN PARTIAL SUMMARY JUDGMENT MOTION
In the Order of September 11, 2002, the Court granted Defendant North Star's Motion for Partial Summary Judgment. Specifically, the Court granted summary judgment on Plaintiff's claims of 1) disability discrimination in violation of the Americans with Disabilities Act, 2) hostile work environment harassment, 3) retaliation in violation of Title VII, 4) wrongful termination under state law, and 5) intentional infliction of emotional distress. Though Defendant North Star re-urges its Motion for Partial Summary Judgment on these claims in the currently pending Motion for Summary Judgment, the Court will not re-address these claims except to the extent they are raised in Plaintiff's Motion for Reconsideration.
2. AGE DISCRIMINATION
In this case, Plaintiff appears to have two theories of age discrimination. One theory involves the terms and conditions of her employment in which she claims she was discriminated against because of her age. The second theory is that she was terminated because of her age.
The court employs a burden shifting analysis in determining whether the plaintiff has demonstrated a claim under the ADEA. Wallis v. J.R. Simplot Co., 26 F.3d 885, 889 (9th Cir. 1994) (referring to the factors set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802 (1973)). A plaintiff must first establish a prima facie case of discrimination. Id. The degree of proof necessary to establish a prima facie case is minimal and need not rise to the level of a preponderance of the evidence. Id. To establish a prima facie case of discrimination, Plaintiff must show that she was: 1) a member of the protected class (at least age 40), 2) performing her job satisfactorily, 3) discharged, and 4) replaced by a substantially younger employee with equal or inferior qualifications. Coleman v. Quaker Oats Co., 232 F.3d 1271, 1281 (9th Cir. 2000)( cert. denied 533 U.S. 950 (2001)).
Upon the plaintiff establishing a prima facie case of discrimination, the burden shifts to the defendant to articulate and offer evidence in support of a legitimate, nondiscriminatory reason for its employment decision. Wallis, 26 F.3d at 889. Once the defendant fulfills this burden of production, "the McDonnell Douglas presumption of unlawful discrimination `simply drops out of the picture.'" Id. (quoting St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502 (1993)). Finally, the burden returns to the plaintiff to demonstrate that the employer's alleged reason for the adverse employment decision is a pretext for discrimination. Id.
a. TERMS AND CONDITIONS OF EMPLOYMENT
Plaintiff has three claims for how her terms and conditions of employment were negatively impacted by her age. Specifically, she claims that she was not hired as a 601 crane operator, she was forced to take a drug test after the March 7, 2000, accident, and she was not allowed to bring witnesses to the hearing regarding the accident.
Taking the above test for establishing a prima facie case and applying it to the types of discrimination Plaintiff is claiming, for Plaintiff to establish the prima facie case, she must show she is a member of a protected class, she was qualified for the position or performing the position to her employer's expectations, she suffered an adverse employment action, and younger people were treated more favorably. In this case, it is undisputed that Plaintiff was a member of a protected class, i.e. over 40. Therefore, the Court will focus on the other three factors in analyzing Plaintiff's claims.
In her entire response to Defendant's Motion for Summary Judgment, Plaintiff never attempts to meet the McDonnell-Douglas framework with respect to any of her age discrimination claims. See Doc. #109. Accordingly, to the extent Plaintiff raised an age discrimination claim for the three terms and conditions of employment identified by Defendant North Star in its Motion, Plaintiff has failed to establish a prima facie case of age discrimination. Accordingly, Defendant's Motion for Summary Judgment on these claims will be granted.
b. TERMINATION
As indicated above, for Plaintiff to establish a prima facie case of discrimination, she must meet the elements listed in Coleman. However, in her response to Defendant's Motion for Summary Judgment, Plaintiff offers no evidence or argument regarding her age discrimination claim. Accordingly, Defendant's Motion for Summary Judgment on this claim will be granted.
Defendant North Star has also moved for summary judgment on Plaintiff's hostile work environment based on age claim, if Plaintiff intended to allege such a claim. Plaintiff failed to present any evidence, law, or argument to support a hostile work environment claim based on age. Accordingly, assuming for purposes of this Order that Plaintiff plead such a claim, Defendant North Star's Motion for Summary Judgment on such claim will be granted.
3. GENDER DISCRIMINATION
"Under Title VII, an employer may not discriminate against an individual with respect to [her] . . . terms, conditions, or privileges of employment because of her sex. This provision makes disparate treatment based on sex a violation of federal law." Villiarimo v. Aloha Island Air, Inc. 281 F.3d 1054, 1061 (9th Cir. 2002) (citations and quotations omitted).
"[T]o show disparate treatment under Title VII [plaintiff] must first establish a prima facie case of discrimination. Specifically, she must show that (1) she belongs to a protected class; (2) she was qualified for the position; (3) she was subjected to an adverse employment action; and (4) similarly situated men were treated more favorably, or her position was filled by a man . . . [U]nder the McDonnell Douglas framework, the requisite degree of proof necessary to establish a prima facie case for Title VII on summary judgment is minimal and does not even need to rise to the level of a preponderance of the evidence.
If the plaintiff establishes a prima facie case, the burden of production — but not persuasion — then shifts to the employer to articulate some nondiscriminatory reason for the challenged action. If the employer does so, the plaintiff must show that the articulated reason is pretextual either directly by persuading the court that a discriminatory reason more likely motivated the employer or indirectly by showing that the employer's proffered explanation is unworthy of credence. Although a plaintiff may rely on circumstantial evidence to show pretext, such evidence must be both specific and substantial. Finally, if the plaintiff can show pretext, then the McDonnell Douglas framework disappears, and the sole remaining issue is discrimination vel non. Of course, although intermediate evidentiary burdens shift back and forth under this framework, the ultimate burden of persuading the trier of fact that the defendant intentionally discriminated against the plaintiff remains at all times with the plaintiff."Id. at 1062 (citations and quotations omitted). An alternative formulation of the prima facie case is that, "a plaintiff must show that: (1) she belongs to a protected class, (2) she was performing according to her employer's legitimate expectations, (3) she suffered an adverse employment action, and (4) other employees with qualifications similar to her own were treated more favorably." See Bergene v. Salt River Project, 272 F.3d 1136, 1140 (9th Cir. 2001).
a. TERMS AND CONDITIONS OF EMPLOYMENT
Again, Defendant North Star has identified the three areas in which Plaintiff claims to have been discriminated against due to her gender: 1) Defendant North Star did not allow her to become a 601 crane operator, 2) Defendant North Star required her to take a drug test after the March 7 accident, and 3) Defendant North Star did not allow her to bring witnesses to her internal appeal hearing regarding her termination. First, as a female, Plaintiff is a member of a protected class; thus, the Court need only consider the other three categories for establishing the prima facie case.
1. CRANE OPERATOR POSITION
With respect to the crane operator position, Plaintiff must show that she was qualified for the position. The only support Plaintiff has that she was qualified for the position is the statement in her affidavit that she "was promised" the position, but then was terminated. However, the Court cannot determine from this statement who promised her the position, or whether the person who made the promise was in a position to assess Plaintiff's fitness for the position, much less had assessed she was qualified. Accordingly, the Court finds that Plaintiff has failed to show that she was qualified for the position.
Additionally, Plaintiff has failed to show she suffered the adverse employment action in the terms and conditions of her employment of not receiving the crane operator position because Plaintiff herself has said in her affidavit that she did receive the position. Finally, Plaintiff has failed to show that people outside her protected class were treated more favorably because Plaintiff has admitted that two of the four crane operators were women. Thus, Plaintiff has failed to establish the prima facie case with respect to her terms and conditions of employment.
2. DRUG TEST
With respect to being required to take a drug test, at paragraph 57 of its statement of facts (Doc. #92), Defendant North Star states that North Star requires all employees who receive outside medical treatment to take drug tests. Plaintiff does not dispute this fact. At paragraph 4 of Plaintiff's statement of facts (Doc. #109), Plaintiff claims that another female and herself were required to take drug tests, while a male was not; however, Plaintiff fails to identify whether the other female or the male fell within the company policy of having received outside medical attention. (The same is true for the individuals referenced in paragraph 15 of Plaintiff's statement of facts (Doc. #109).) Thus, Plaintiff has failed to show that similarly situated individuals outside her protected class were treated more favorably. Further, Plaintiff has failed to show how being required to take a drug test is an adverse employment action. See Burlington Ind., Inc. v. Ellerth, 524 U.S. 742, 765 (1998) (noting that tangible employment actions include discharge, demotion or undesirable reassignment). Thus, Plaintiff has failed to show that she suffered an adverse employment action, or that individuals outside her protected class were treated more favorably. Accordingly, she has failed to make a prima facie showing of discrimination on her drug testing claim.
3. WITNESSES
With respect to Plaintiff's claim that she was not allowed to bring witnesses to her internal appeal hearing, Plaintiff has failed to show how this is an adverse employment action. Further, Plaintiff has failed to show that individuals outside her protected class were allowed to bring witnesses to such a hearing. Accordingly, Plaintiff has failed to establish her prima facie case with respect to this claim also.
b. TERMINATION
Plaintiff also claims she suffered gender discrimination which resulted in her termination. As indicated above, Plaintiff is a member of a protected class. Additionally, Plaintiff's termination was an adverse employment action. Thus, the issues to consider in determining whether Plaintiff has established a prima facie case are whether Plaintiff was performing according to her employer's legitimate expectations, and whether similarly situated individuals outside her protected class were treated more favorably.
Plaintiff claims, and Defendant North Star does not dispute, that up to the accident which was ultimately the reason for Plaintiff's termination, Plaintiff was performing up to her employer's legitimate expectations. Defendant North Star argues that Plaintiff's involvement in the accident and Plaintiff's alleged falsification of her report about the accident failed to meet Defendant North Star's legitimate expectations of Plaintiff's job performance; and, therefore, Plaintiff was not performing according to the employer's legitimate expectations.
Defendant North Star re-urged its motion to strike (Doc. #75) as part of its summary judgment pleadings. In the motion to strike, Defendant North Star moves to strike Plaintiff's testimony about her work history as "conclusory." The Court finds that Plaintiff may testify about her work history and this objection is overruled. Further, Plaintiff has additional evidence of her work history to support this testimony at exhibit 9 to Doc. #66.
Plaintiff claims that she never told anyone how the accident occurred; therefore, she could not have given false information because she did not give any information. Doc. #109 at ¶ 6. Mr. Stone, an employee of Defendant North Star, testified that Plaintiff twice told him how the accident happened and on each such occasion she gave a different version of the facts as to how the accident occurred. Doc. #92, ¶¶ 83-89. Mr. Stone further testified that based on his investigation, he determined that the accident could not have occurred as Plaintiff had told him. Id. The Court finds that on this point there is a disputed issue of fact as to whether Plaintiff told Mr. Stone multiple versions of how the accident occurred from which Mr. Stone could have concluded that Plaintiff had falsified her report.
Specifically, Plaintiff states, "Affiant told everyone involved that she did not know how the accident happened. . . . At no time did Affiant tell anyone anything other than the fact that after bringing the locomotive down the hill, the [sic] one or more cars came uncoupled and subsequently crashed into the engine at the bottom of the hill where the accident occurred." Doc. #66, Ex. 1, ¶ 6.
Next, the Court must consider whether Plaintiff has made a showing that similarly situated individuals outside her protected class were treated more favorably. In paragraph 15 of her affidavit, attached as exhibit I to Doc. #66, Plaintiff claims that Mark Jones and Dale Stickrath (both of whom the Court has presumed are male, though such fact was not specifically alleged) had industrial accidents but were not terminated. Considering all of these facts, the Court finds Plaintiff has made a prima facie showing on this claim.
Now, the burden shifts to the Defendant to articulate a legitimate non-discriminatory reason for Plaintiff's termination. Defendant's reason in this case is Plaintiff's alleged falsification of her report regarding the accident. Generally, the falsification of an accident report would be a legitimation non-discriminatory reason for termination. However, in this case, there is a disputed issue of fact as to whether Plaintiff actually gave a report which could be deemed false. Thus, there is a disputed issue of fact as to whether Defendant North Star had a legitimate non-discriminatory reason for Plaintiff's termination. Accordingly, Defendant having failed to meet its burden, Defendant's Motion for Summary Judgment on Plaintiff's gender discrimination in her termination claim will be denied.
Defendant North Star argues that under Villiarimo, it does not matter whether Plaintiff actually falsified her report, as long as Defendant genuinely believed she falsified her report. 281 F.3d at 1063. However, under Plaintiff's version of the facts, i.e. that Mr. Stone fabricated Plaintiff's falsification, Defendant could not have genuinely believed Plaintiff falsified her report.
4. BACK PAY, FRONT PAY, AND PUNITIVE DAMAGES
a. BACK PAY AND FRONT PAY
Plaintiff cannot recover back pay or front pay in this case because her exclusive remedy for her industrial injury is Arizona's workers' compensation law. A.R.S. § 23-1022(A). Additionally, Plaintiff cannot recover back pay or front pay if she would not have continued working in any event. See generally O'Day v. McDonnell Douglas Helicopter Co., 79 F.3d 756, 761 (9th Cir. 1996). In this case, Plaintiff does not dispute that since she was injured on the job, she has been unable to work. Therefore, even if Defendant's actions are found to have been based on gender discrimination, Plaintiff cannot receive back pay or front pay.
b. PUNITIVE DAMAGES
The employer will be liable for punitive damages if it acts with malice or with reckless indifference to the employee's federally protected rights. Kolstad v. American Dental Ass'n, 527 U.S. 526, 535 (1999). Additionally, "In Kolstad. . . . the Supreme Court clarified the standard to be applied in assessing punitive damages in the employment discrimination context. The Court rejected the contention that punitive damages are available only in cases of an employer's egregious conduct. But it held that, to be liable for punitive damages, the employer must at least discriminate in the face of a perceived risk that its actions will violate federal law. . . . Most relevant here, the Court held that in the punitive damages context, an employer may not be vicariously liable for the discriminatory employment decisions of managerial agents where those decisions are contrary to the employer's good faith efforts to comply with Title VII." Swinton v. Potomac Corp., 270 F.3d 794, 809-10 (9th Cir. 2001) (internal citations and quotations omitted).
In this case, there is a disputed issue of fact as to whether Plaintiff actually falsified her report to Defendant, which is the justification for terminating Plaintiff unlike other male employees who also had industrial accidents. Thus, the issue before the Court is whether this disputed issue of fact is sufficient to allow punitive damages to go to the jury. Basically, Plaintiff's version of the facts is that she always said she did not know how the accident occurred and that Mr. Stone was lying when he said that Plaintiff gave multiple versions of how the accident occurred. Doc. # 109 at ¶ 6. If the jury believes Plaintiff's version of the facts, i.e. that Defendant fabricated an entire story just to fire her, when Defendant did not fire men who engaged in the same behavior, the jury could conclude that such fabrication was recklessly indifferent to Plaintiff's federally protected rights. Thus, Defendant's Motion for Summary Judgment on punitive damages will be denied.
B. PLAINTIFF'S MOTION FOR RECONSIDERATION
As indicated above, in ruling on Defendant North Star's Motion for Partial Summary Judgment, the Court granted summary judgment to Defendant North Star on several of Plaintiff's claims. Plaintiff has moved for reconsideration of the Order granting partial summary judgment with respect to one claim: Plaintiff's wrongful termination claim under A.R.S. § 23-1501(3)(c)(iii).
Because Plaintiff seeks reconsideration of an interlocutory order, Plaintiff's motion falls within the Court's inherent authority to modify an order prior to final judgment. See City of Los Angeles, Harbor Div. v. Santa Monica Baykeeper, 254 F.3d 882, 887 (9th Cir. 2001). In Saini v. Immigration Naturalization Svc., 64 F. Supp.2d 923, 925 (D. Ariz. 1999), the Court stated that a motion for reconsideration should be granted only if: 1) the Court has patently misunderstood a party, 2) the Court has made a decision outside the adversarial issues presented to it, 3) the Court has made an error not of reasoning but of apprehension, or 4) where there has been a controlling or significant change in the law or facts since the submission of the issue to the Court.
In this case, Plaintiff argues that the Court misapplied the law. The Court notes that this is not a reason for seeking reconsideration. Additionally, the Court finds that the Motion fails on its merits. Plaintiff is asking this Court to impute to Defendant North Star the knowledge that Plaintiff would be filing a worker's compensation claim solely because Plaintiff was injured on the job. Then, Plaintiff asks the Court to impute to Defendant a retaliatory motive in terminating Plaintiff so close to the time of her injury because of Defendant's "knowledge" that she would be filing a worker's compensation claim.
Plaintiff claims in her reconsideration motion that this Court held that an injured employee could never bring a wrongful termination claim if the employer fired the employee before the employee filed her claim with industrial commission. Plaintiff's allegation of the Court's holding is mistaken. In fact, the Court noted that in this circuit, there is no difference between advising an employer of an intent to file and actually filing. However, in this case, Plaintiff has offered no evidence that her employer had any reason to know she intended to engage in the protected activity of filing a worker's compensation claim. Further, she has offered no evidence of a causal connection between her protected activity ( i.e. being injured, which she claims put her employer on constructive notice that she intended to engage in a protected activity), and her termination. Because Plaintiff has failed to establish the prima facie case of retaliation, her Motion for Reconsideration will be denied.
C. BIRMINGHAM'S MOTION FOR SUMMARY JUDGMENT
In this case, the issue of the amount of coverage to which Plaintiff is entitled has been determined by the Arizona Industrial Commission. Further, there is no dispute that, at this point, Defendant Birmingham has paid all amounts owed. Thus, the only issue is whether Defendant Birmingham acted in bad faith, and/or with the intention of inflicting emotional distress, in how it handled Plaintiff's claim prior to when it paid the claim.
1. BAD FAITH
Under Arizona law, a plaintiff establishes bad faith on the part of the insurance company by showing that the company 1) denied the claim without a reasonable basis for the denial and 2) either knew or recklessly disregarded the fact that it did not have a reasonable basis for denying the claim. Noble v. National Am. Life Ins. Co., 624 P.2d 866, 868 (Ariz. 1981). The first prong of the test for bad faith is an objective test based on reasonableness. Trus Joist Corp. v. Safeco Ins. Co., 735 P.2d 125, 134 (Ariz.App. 1986). The second prong is a subjective test, requiring the plaintiff to show that the defendant insurance company committed consciously unreasonable conduct. Id.
Considering the second (subjective) prong first, in this case, Defendant has not moved for summary judgment based on the second prong of Noble. However, Plaintiff bears the burden of showing Defendant did not have an objectively reasonable or subjectively reasonable basis for its decision. Noble, 624 P.2d at 868. Thus, the Court can grant summary judgment in Defendant's favor if there is no disputed issue of fact that Defendant's conduct was objectively reasonable.
Because Defendant has not moved for summary based on the subjective prong of Noble, the Court need not consider this prong. However, the fact that Defendant did not move for summary judgment on this basis does not change Plaintiff's burden of proof at trial, which includes Plaintiff presenting evidence that Defendant's actions violated the subjective prong of the Nobel test. To date, Plaintiff has offered no evidence which would indicate Plaintiff can meet this burden at trial. However, as indicated above, because Defendant did not move for summary judgment on this basis, the Court need not consider it.
In considering whether Defendant's conduct was objectively reasonable, the Court considers whether the claim was "fairly debatable." Deese v. State Farm MutualAuto. Ins. Co., 838 P.2d 1265, 1268 (Ariz. 1992). If a claim was not fairly debatable, and was denied by the insurance company, then the insurance company has, at a minimum, failed the objective prong of the Noble test. See Zilisch, 995 P.2d 276, 280, ¶ 22 (Ariz. 2000) ("as we have held, while fair debatability is a necessary condition to avoid a claim of bad faith, it is not always a sufficient one"); but see Lasma Corp. v. Monarch Ins. Co., 764 P.2d 1118, 1122 (Ariz. 1988)("the tort [of bad faith] will not lie for claims which are `fairly debatable'").
Thus, in determining whether Defendant is entitled to summary judgment on Plaintiff's bad faith claim, the Court must determine whether the claim was fairly debatable. If claim the was not fairly debatable, then Defendant will have failed the first prong of the Noble test, and the second prong of the Noble test is not raised in the Motion for Summary Judgment; thus, the Motion for Summary Judgment on bad faith will be denied. If the claim was fairly debatable, then as a matter of law, Defendant can not be liable for bad faith for failing to pay the claim immediately. See Lasma, 764 P.2d at 1122.
However, even if as a result of a claim being fairly debatable Defendant is not liable for bad faith for failing to pay the claim immediately, Defendant might still be liable for bad faith if the way Defendant processed the claim after the initial refusal to pay was unreasonable. Zilisch, 995 P.2d at 280, ¶ 22. In this additional inquiry on bad faith, the Court considers whether the Defendant acted reasonably in conducting the investigation, evaluation, and processing of the claim and whether the insurer knew or was conscious of the fact that its conduct was unreasonable. Id. The second part of this inquiry is the same subjective test articulated under the Noble standard, which is not at issue in this case. In considering whether Defendant acted reasonably in processing even a fairly debatable claim, the Court considers whether Defendant immediately conducted an adequate investigation, whether Defendant acted reasonably in evaluating the claim, and whether the Defendant acted promptly in paying a legitimate claim. Id.
Zilisch, the case which articulated the model of considering claims processing as an additional basis for bad faith even when a claim is fairly debatable, was a case involving under-insured motorist coverage. In Zilisch, there was no question that the plaintiff's underinsured motorist coverage applied. The allegedly debatable issue was the amount of damages, which turned on the extent of the plaintiffs injuries. A cause of action for bad faith in claims processing would not lend itself to all insurance claims. For example, if the insurance company took the position that, accepting the facts as the insured had presented them as true, the injury to the insured would be outside the scope of the policy, then there would be no additional investigation or evaluation for the insurance company to undertake. Therefore, as long as the insurance company's interpretation of the policy was reasonable, there would be no additional bad faith inquiry. Conversely, in a case where there is clearly coverage and the only issue is the amount of damages, then under Zilisch, the insurance company has a duty to determine this amount in a reasonable manner.
Before the Industrial Commission ruled on Plaintiff's claim, this case fell somewhere in the middle because under Plaintiff's version of the facts she may have been entitled to coverage. Therefore, the fact of coverage and the amount of damages were both at issue.
In this case, Defendant was required to pay Plaintiff benefits if she had an injury from an accident arising out of the course and scope of her employment. See A.R.S. § 23-1021(A). However, Defendant is not required to pay benefits for an on the job injury that was a self-inflicted, an injury cause by activity outside the scope of Plaintiff's work, or an injury that resulted from horseplay. See A.R.S. § 23-1021(A) (self-inflicted injuries); General Trans., Inc. v. Ind. Comm., 586 P.2d 1322, 1324 (Ariz.App. 1978) (scope of employee's work); Lemmon v. Ind. Comm'n, 740 P.2d 484, 486-87 (Ariz.App. 1986) (horseplay). Ultimately, the Industrial Commission determined that Plaintiff was entitled to benefits. However, the fact that the insurance company was wrong in its initial denial of benefits does not equate to it having acted in bad faith. State Farm Mut. Auto Ins. Co. v. Lee, 13 P.3d 1169, 1175, ¶ 15 (Ariz. 2000).
Defendant Birmingham alleges, and Plaintiff does not dispute, that Defendant North Star advised Birmingham that Defendant North Star believed that Plaintiff had provided Defendant North Star with false information regarding how the accident in this case occurred. Defendant Birmingham then concludes that such information made Plaintiff's claim fairly debatable. The Court agrees with Defendant Birmingham that the information provided to Defendant Birmingham was sufficient to make Plaintiff's initial request for benefits fairly debatable. Thus, Defendant Birmingham did not act in bad faith in failing to pay Plaintiff's claim immediately. However, this necessary condition to Defendant Birmingham not being liable for bad faith, is not a sufficient condition. See Zilisch, 995 P.2d at 280, 22.
Thus, the Court must now consider whether Defendant Birmingham acted reasonably in its processing of Plaintiff's fairly debatable claim. First, the Court considers whether Defendant's investigation was reasonable. Defendant has presented no evidence that it did an independent investigation of how Plaintiff's accident occurred. The fact that no independent investigation occurred is significant because even if Defendant Birmingham was entitled to rely on Defendant's North Star's determination that Plaintiff gave false information about how her accident occurred, and even assuming Plaintiff did in fact give such false information, this act by Plaintiff would not have relieved Defendant Birmingham from owing Plaintiff benefits under the policy. Instead, Defendant Birmingham would have to determine that Plaintiff either self-inflicted her injuries, was acting outside the scope of her job, was involved in horseplay, or was engaged in some other behavior that would take her outside the scope of coverage. Defendant Birmingham has cited no case that states that if Plaintiff is dishonest about how an accident occurred, then there is no worker's compensation coverage. Thus, while Defendant North Star's report that Plaintiff falsified how the accident occurred gave Defendant Birmingham the right to initially deny the claim without acting in bad faith, such information also gave Defendant Birmingham a duty to reasonably process the claim, including an investigation and evaluation, to determine whether Plaintiff was entitled to coverage.
At oral argument, Defendant Birmingham argued that there were no witnesses it could interview because no one witnessed the accident. Additionally, Defendant Birmingham argued that when it called Plaintiff, she hung up on the representative from Defendant Birmingham. Nowhere in Defendant Birmingham's statement of facts does Defendant Birmingham support its claim that it attempted to contact Plaintiff and she hang-up them. However, the deposition of Defendant Birmingham's agent who claims to have been hung-up on is attached to Plaintiff's statement of facts, so the Court can consider the evidence.
In her affidavit, Plaintiff alleges that in this one phone conversation with Defendant Birmingham's agent, the agent never asked any questions relating to how the accident occurred. Doc. # 111, Ex. 3, ¶ 7. Therefore, there is a disputed issue of fact as to whether Defendant Birmingham attempted to conduct an investigation of the accident through conversations with Plaintiff.
The record at this point indicates that there is a disputed issue of fact as to the scope and reasonableness of Defendant Birmingham's investigation. It is further disputed whether it was reasonable for Defendant Birmingham to cause Plaintiff, who was injured in March of 2000, to hire an attorney and proceed to a hearing before the Industrial Commission, which ultimately resulted in an award of benefits to Plaintiff in August of 2000. This record creates a question of fact under Zilisch as to whether Defendant Birmingham acted reasonably in its processing of Plaintiff's claim. Accordingly, the Motion for Summary Judgment on bad faith will be denied.
Plaintiff appears to have two additional theories of bad faith against Defendant Birmingham regarding its handling of Plaintiff's claim after Plaintiff was awarded benefits by the Industrial Commission. The first theory involves how quickly Defendant Birmingham paid Plaintiff the benefits awarded. The second theory involves the medical treatment authorized for Plaintiff Plaintiff makes absolutely no argument about either of these two theories in her response to Defendant Birmingham's Motion for Summary Judgment. Instead, Plaintiff merely lists facts in the facts section of her responsive pleading that may or may not be relevant to these theories.
For example, in the facts section, Plaintiff restates the conclusions of Mr. Thomas Whitley (whose fact and expert testimony is discussed more fully below). Regardless of the Court's ruling on the motion to strike Mr. Whitley's affidavit, the Court finds that Mr. Whitley's conclusory statements, without any factual support, are insufficient to create a question of fact on a bad faith claim.
For example, Mr. Whitley avows: 1) the insurer unreasonably delayed payments of compensation after it knew the administrative law judge had found the matter compensable; 2) the insurer continually underpays benefits to Plaintiff; the insurer impugns the integrity of Plaintiff by alleging that she has made no good faith effort to find work in that they have alleged some of the places Plaintiff has looked for work do not exist, without a reasonable investigation; 3) the insurer had contacted some of Plaintiff's medical providers before and after the Industrial Commission had found the claim compensable and advised them that Plaintiff falsified the claim; and 4) the above acts constitute serious acts of bad faith. Doc. #111; Ex. 2.
Nonetheless, with respect to Plaintiff's first post-administrative law judge determination theory of bad faith, in her affidavit, Plaintiff avows that she was entitled to $1,600.00 per month because she was fully disabled. Plaintiff further avows that Defendant Birmingham only paid her $600.00 per month. Plaintiff also avows that Defendant Birmingham did not pay her the back benefits to which she was entitled, which she concludes were $16,000.00. Defendant Birmingham claims that it paid all that was owed on October 25, 2000, two days after it received Plaintiff's earnings statement. Plaintiffs only support for her theory that she should receive full benefits, both in the back payment and in the monthly payments, is her own affidavit in which she states that her doctors thought she was fully disabled (and, therefore, entitled to full benefits). Conversely, Defendant Birmingham states that conflicting doctors reports regarding the extent of Plaintiff's disability caused the amount owed to Plaintiff to be debatable. Defendant Birmingham cites two doctors reports that both indicate that Plaintiff was on regular duty to return to work in September and October of 2000. (Doc. #92, Ex. 13, 14).
The Court finds that, even assuming Plaintiff could create a disputed issue of fact as to whether some un-cited doctors reports had her at fully disabled by only her own affidavit, the conflicting reports offered by Defendant made the amount of Plaintiff's claim at the time she was awarded benefits fairly debatable. Because the amount was fairly debatable, Defendant did not commit bad faith by not paying full benefits to Plaintiff immediately. Therefore, Defendant Birmingham is entitled to summary judgment on Plaintiff's claim of bad faith for Defendant's failure to immediately pay full benefits to Plaintiff (specifically $1,600 per month and $16,000 in back benefits).
With respect to Plaintiff's second post-administrative law judge determination theory of bad faith, Plaintiff offers no evidence or argument regarding medical treatment that she needed or even sought after the award of benefits that Defendant Birmingham denied. Instead, again in only her affidavit, she states, "when Affiant needed medical care, she was repeatedly forced to wait for extended periods of time for each doctor's visit to be approved by the insurer who would not give Affiant any reason for the delay." Doc. # 111, Ex. 3, ¶ 5. Thus, without argument, Plaintiff apparently seeks to have the Court conclude that Plaintiff's testimony that she had to wait extended periods of time creates a question of fact for the jury as to whether Defendant Birmingham acted in bad faith in administering her claim.
As discussed above, under Zilisch, Defendant must reasonably process Plaintiff's claim. However, Plaintiff has cited no case which holds that the speed at which an insurer processes requests for medical treatment can equate to bad faith. Conversely, Defendant has cited no case which holds that the speed at which it approves treatments cannot form the basis of a bad faith action. Under Zilisch, one of the factors the Court considers in a bad faith claim based on claim administration is whether the insurer immediately conducted an adequate investigation of a claim, and promptly paid a legitimate claim. 995 P.2d at 280, ¶ 22. In this case, Plaintiff avows that Defendant Birmingham, without explanation, delayed extended periods before approving her requested medical treatment. This avowal creates an issue of fact as to whether Defendant Birmingham acted reasonably in administering Plaintiff's claim. Accordingly, Defendant Birmingham's Motion for Summary Judgment on this theory of bad faith will be denied.
2. INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS
To prove a claim of intentional infliction of emotional distress under Arizona law, Plaintiff must show that: 1) Defendant engaged in extreme and outrageous conduct, 2) Defendant either intended to cause emotional distress or recklessly disregarded the near certainty that emotional distress would result from the conduct, and 3) Plaintiff actually suffered severe emotional distress because of Defendant's conduct. See Nelson v. Phoenix Resort Corp., 888 P.2d 1375, 1386 (Ariz.Ct.App. 1994). In determining whether Defendant's conduct was extreme and outrageous, courts have found that the conduct must be "extraordinary." See Tempesta v. Motorola, 92 F. Supp.2d 973, 986-87 (D. Ariz. 1999). The Arizona Court of Appeals has elaborated on the what is extreme and outrageous conduct, and has held the acts must be, "so outrageous in character and so extreme a degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious and utterly intolerable in a civilized community." Mintz v. Bell Atl. Sys. Leasing, Int'l, 905 P.2d 559, 563 (Ariz.Ct.App. 1995) (citations omitted).
Plaintiff has two theories for how Defendant Birmingham engaged in intentional infliction of emotional distress. The first theory involves Birmingham's claims processing and the length of time it took Plaintiff to ultimately receive benefits. The facts surrounding Defendant Birmingham's claims processing are discussed fully above. Considering these facts, the Court does not find that Defendant Birmingham's actions to be so outrageous as to be beyond all possible bounds of decency. Further, the Court finds that no reasonable jury could conclude otherwise. Thus, Defendant's Motion for Summary Judgment on Plaintiff's claim for intentional infliction of emotional distress based on the claims processing theory will be granted.
Plaintiff's second theory of intentional infliction of emotional distress involves Plaintiff being embarrassed in her community and being unable to receive medical treatment as a result of agents of Defendant Birmingham telling medical providers that Plaintiff was a liar and had falsified her claim. Plaintiff supports her allegation that Defendant's agents made such statements with her affidavit. Defendant Birmingham has moved to strike these portions of her affidavit as hearsay.
The Court agrees that Plaintiff's affidavit contains potentially double hearsay. The first level is the statement from Defendant's agent to the medical provider. The second level is the statement from the medical provider to Plaintiff (so that Plaintiff could make her affidavit based on personal knowledge). Plaintiff correctly argues the statement from Defendant's agent to the medical provider is an admission of a party opponent; accordingly, it is not hearsay. However, the statement from the medical provider to Plaintiff, in which the medical provider relays something Defendant's agent allegedly said, is hearsay not subject to any exception. Further, Plaintiff potentially testifying that "the medical provider told me that Defendant's agent told the medical provider that I am a liar" is being offered for the truth of the matter asserted by the medical provider (i.e. not that Plaintiff is actually a liar, but the fact that Defendant's agent called her a liar). Accordingly, Defendant's Motion to Strike these portions of Plaintiff's affidavit as hearsay will be granted.
Plaintiff also supports this allegation with the deposition testimony of Judy Ann McCoy-Hale. Doc. #111, Ex. 7, Pg. 1. Ms. McCoy-Hale testified that to her knowledge, no one called Plaintiff a liar. Id. at 2. Therefore, Plaintiff has no admissible evidence that agents of Defendant called her a liar to medical providers. Ms. McCoy-Hale testified that an agent of Defendant Birmingham told her that Plaintiff's claim for medical benefits was being denied because Plaintiff falsified her claim. The Court does not find that advising a medical provider of the reason for the denial of a claim rises to the level of extreme and outrageous conduct sufficient to sustain a claim for intentional infliction of emotional distress. Thus, based on this evidence, no reasonable juror could find in Plaintiff's favor on this claim and summary judgment will be granted to Defendant Birmingham.
3. PUNITIVE DAMAGES
To recover for punitive damages, Plaintiff must show something more than the conduct required to state a claim for bad faith. Rawlings v. Apodaca, 726 P.2d 565, 578 (Ariz. 1986). The something more that must be shown is evidence that Defendant was aware of and consciously disregarded a substantial and unjustified risk that significant harm would occur. Id. ("indifference to facts or failure to investigate are sufficient to establish the tort of bad faith but may not rise to the level required by the punitive damages rule").
In this case, Plaintiff offers no evidence of Defendant's state of mind in denying Plaintiff's claim. Further, Plaintiff offers no evidence of outrageous, aggravated, malicious, or fraudulent conduct on the part of Defendant. See id. Accordingly, Defendant's Motion for Summary Judgment on punitive damages will be granted.
D. BIRMINGHAM'S MOTION TO STRIKE/PLAINTIFF'S MOTION TO FILE LATE EXPERT REPORT
As indicated above, Defendant Birmingham's Motion to Strike will be granted in part with respect to certain portions of Plaintiff's affidavit that are based on hearsay. With respect to portions of Plaintiff's affidavit that Defendant claims are based on hearsay that the Court has not yet addressed, the Motion to Strike will be denied because the Court has not relied on such statements for purposes of this Order. The denial of the Motion to Strike is without prejudice to Defendant raising the same objection at trial if appropriate.
Defendant has also moved to strike the late report of attorney Thomas Whitley. Defendant's Motion is based in part on timeliness and in part on its objection that Mr. Whitley is opining as to legal conclusions. In response, Plaintiff has moved to file the report late. Plaintiff's motion is based in part on the fact that Plaintiff claims Mr. Whitley to be both a fact witness (because Mr. Whitley was her counsel before the industrial commission) and an expert witness on insurance bad faith. To the extent Mr. Whitley was timely disclosed as a fact witness, his testimony will be allowed, though the Court has not relied on Mr. Whitley testimony for purposes of this Order. To the extent Plaintiff seeks to use Mr. Whitley as an expert, Plaintiff's Motion will be denied. It would be unfairly prejudicial to allow Plaintiff, in violation of the Federal Rules of Civil Procedure and this Court's scheduling order, to disclose an expert and the expert's report after the close of discovery, when Defendant would have neither the opportunity to depose the expert nor disclose a contradicting expert. Thus, Mr. Whitley will not be allowed as a expert in this case.
E. MOTION TO SEVER
The only claim proceeding to trial in this case against Defendant North Star is Plaintiff's claim of gender discrimination for her termination (and punitive damages). The only claim proceeding to trial in this case against Defendant Birmingham is the claim of bad faith (based on two of four theories of bad faith: claims administration before the administrative law judge ruled and claims administration after the administrative law judge ruled). As is explained above, the law governing each of these claims is completely different. Further, with respect to the facts, as indicated above the case against North Star ends at the time it terminated Plaintiff Conversely, the claim against Birmingham begins after North Star terminated Plaintiff and Plaintiff applied for benefits from Birmingham. Thus, the facts relevant to establishing the legal elements of each of the claims are unrelated. Therefore, the Court will grant the Motion to Sever pursuant to FED. R. Civ. PRO. 20(b) and FED. R. Civ. PRO. 42(b).
IV. CONCLUSION
Based on the foregoing,IT IS ORDERED that Defendant North Star's Motion for Summary Judgment (Doc. #91) is granted with respect to all claims except Plaintiff's claim of gender discrimination resulting in her termination and punitive damages; the Motion is denied with respect to her claim of gender discrimination resulting in her termination and punitive damages;
IT IS FURTHER ORDERED that Plaintiff's Motion for Reconsideration (Doc. # 122) is denied;
IT IS FURTHER ORDERED that Defendant Birmingham's Motion for Summary Judgment (Doc. #93) is granted with respect to all claims except some of Plaintiff's bad faith claim; the Motion is denied with respect to Plaintiff's bad faith claim as indicated above; IT IS FURTHER ORDERED that Defendant Birmingham's Motion to Strike (Doc. #120) is granted in part and denied in part; specifically, it is granted with respect to certain hearsay statements in Plaintiff's affidavit as indicated above and denied without prejudice with respect to all other statements in Plaintiff's affidavit, further, it is granted with respect to the expert opinions, but not the factual opinions, of Mr. Whitley;
Specifically, Plaintiff's theory of bad faith based on Defendant Birmingham's processing of Plaintiff's claim before the administrative law judge awarded benefits and Plaintiff's claim based on Defendant Birmingham's processing of Plaintiff's claim after the administrative law judge awarded benefits will proceed to trial; Defendant Birmingham has prevailed on its Motion for Summary Judgment on Plaintiff's claims of bad faith for Defendant Birmingham's initial denial of Plaintiff's claim and for Defendant Birmingham's initial refusal to pay Plaintiff full disability benefits after the administrative law judge awarded benefits.
IT IS FURTHER ORDERED that Plaintiff's Motion to File Late Expert Report (Doc. #129) is denied;
IT IS FURTHER ORDERED that Plaintiff's first filed Motion to File Expert Report (Doc. #127), which was re-filed with exhibits at Doc. #129, is denied as moot; IT IS FURTHER ORDERED that Defendant North Star's Motion to Sever (Doc. # 86) is granted.