Court of Appeals Reverses and Remands Grant of Summary Judgment Against Plaintiff in Bad Faith Claim
In Dunlap v. AIG, Inc., Commerce and Industry Insurance Company, No. 17-1503 (Iowa App. Jan. 9, 2019), the Court of Appeals reverses a district court order granting summary judgment in favor of defendants in a workers' compensation claim. The case was brought following a workers' compensation action in which claimant was found entitled to benefits but penalty benefits were denied because the issue of liability was fairly debatable because defendants had one doctor opining that the injury was not work-related.
In the underlying workers' compensation claim, Dr. Wolfe had opined that it is possible that Dunlap's arm injuries, while not directly caused by the initial work injury, were a result of the natural consequences of claimant's back injury requiring him to ambulate with the use of a cane. Despite this, defendants continued to deny liability. Claimant was ultimately found to be permanently and totally disabled and awarded medical care.
Plaintiff subsequently amended his petition to add a bad faith claim related to his 2012 injuries and PTD award, and subsequently amended again to add a claim of abuse of process. The district court granted summary judgment to defendants on claimant's 2007 work injury claim (back) and found that defendants had a reasonable basis for denying the claim. With respect to the arm issue, the district court concluded there was a genuine issue as to the reasonableness of defendants' decision. A mileage claim was found not to be amenable to court process, since claimant had not exhausted his administrative remedies. Finally, with respect to claims for intentional infliction of emotional distress, the court found that defendants' conduct was not extreme and outrageous. The court denied the amendment for abuse of process, stating that abuse of process did not extend to administrative proceedings.
In a further ruling, the court revisited the issue of summary judgment with respect to the arm issue and found that plaintiff did not meet his burden by producing evidence that it would be unreasonable for defendants to rely on their physician's no causation opinion. Summary judgment was granted in favor of defendants.
In reviewing the district court's decision, the court of appeals concludes that whether defendants unreasonably denied Dunlap his medical care in handling his 2007 claim was the same issue litigated and decided by the deputy. Since the "reasonable basis" inquiry was before the agency in the penalty claim filed and denied on judicial review, plaintiff was found to be precluded from arguing a lack of reasonable basis in the form of a bad faith tort action.
On the 2012 arm issue, the court of appeals concluded that the mere existence of an expert opinion denying causation was not sufficient to demonstrate that the issue of liability was fairly debatable. The court finds there was an issue of material fact in terms of the investigation of the claim by the defendants. Specifically, there was a question of whether the insurer's reliance on the report was unreasonable, making this fairly debatable. Recall that Dr. Wolfe's opinion can actually be seen as supporting causation for the arm issue. The court also noted that although an issue may be fairly debatable at one time, circumstances can change so that it is not fairly debatable.
On the mileage claims, the court concluded that the dispute was not whether claimant was entitled to payment of his transportation expenses, but whether he was reimbursed in a timely manner, constituting bad faith. Despite the conclusion that the claim was not barred because of exhaustion, the court concluded that there is no statutory deadline for repayment of transportation expenses. Because the claims were presented all at once, and defendants paid the mileage all at once, there was no evidence that defendants had purposefully mishandled the claims. This portion of the district court's ruling was affirmed.
The intentional infliction of emotional distress claim was also affirmed, as the court concludes that there was no evidence of outrageous conduct. The court concluded it was clear that defendants' acts "did not even approach this type of conduct." On the abuse of process claim, the court finds that there was no use of legal process by defendants and thus denial of the motion to amend was not an abuse of discretion.
In reviewing the district court's decision, the court of appeals concludes that whether defendants unreasonably denied Dunlap his medical care in handling his 2007 claim was the same issue litigated and decided by the deputy. Since the "reasonable basis" inquiry was before the agency in the penalty claim filed and denied on judicial review, plaintiff was found to be precluded from arguing a lack of reasonable basis in the form of a bad faith tort action.
On the 2012 arm issue, the court of appeals concluded that the mere existence of an expert opinion denying causation was not sufficient to demonstrate that the issue of liability was fairly debatable. The court finds there was an issue of material fact in terms of the investigation of the claim by the defendants. Specifically, there was a question of whether the insurer's reliance on the report was unreasonable, making this fairly debatable. Recall that Dr. Wolfe's opinion can actually be seen as supporting causation for the arm issue. The court also noted that although an issue may be fairly debatable at one time, circumstances can change so that it is not fairly debatable.
On the mileage claims, the court concluded that the dispute was not whether claimant was entitled to payment of his transportation expenses, but whether he was reimbursed in a timely manner, constituting bad faith. Despite the conclusion that the claim was not barred because of exhaustion, the court concluded that there is no statutory deadline for repayment of transportation expenses. Because the claims were presented all at once, and defendants paid the mileage all at once, there was no evidence that defendants had purposefully mishandled the claims. This portion of the district court's ruling was affirmed.
The intentional infliction of emotional distress claim was also affirmed, as the court concludes that there was no evidence of outrageous conduct. The court concluded it was clear that defendants' acts "did not even approach this type of conduct." On the abuse of process claim, the court finds that there was no use of legal process by defendants and thus denial of the motion to amend was not an abuse of discretion.
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