Roman v. Berkshire Hathaway Homestate Insurance Company et al

Filing 86

ORDER - IT IS THEREFORE ORDERED that Defendant's Motion for Summary Judgment (Doc. 55 ) is granted. IT IS FURTHER ORDERED that the Clerk enter judgment against Plaintiff on his complaint and in favor of Defendant, and that Plaintiff take nothing. The Clerk shall terminate this case. (See document for further details). Signed by Senior Judge Neil V Wake on 9/6/17.(SLQ)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Manuel Roman, No. CV-15-02447-PHX-NVW Plaintiff, 10 11 v. 12 ORDER Berkshire Hathaway Homestate Insurance Co., 13 Defendant. 14 15 16 Before the Court is Defendant’s Motion for Summary Judgment. (Doc. 55). For 17 the following reasons, the Motion will be granted. 18 I. LEGAL STANDARD 19 Summary judgment should be granted if the evidence reveals no genuine dispute 20 of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. 21 Civ. P. 56(a). A material fact is one that might affect the outcome of the suit under the 22 governing law, and a factual dispute is genuine “if the evidence is such that a reasonable 23 jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 24 477 U.S. 242, 248 (1986). It is the moving party’s burden to show there are no genuine 25 disputes of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Upon such a 26 showing, however, the burden shifts to the non-moving party, who must then “set forth 27 specific facts showing that there is a genuine issue for trial” without simply resting on the 28 pleadings. Anderson, 477 U.S. at 256. To carry this burden, the non-moving party must 1 do more than simply show there is “some metaphysical doubt as to the material 2 facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). 3 Where the record, taken as a whole, could not lead a rational trier of fact to find for the 4 non-moving party, there is no genuine issue for trial. Id. at 587. 5 II. UNDISPUTED MATERIAL FACTS 6 Plaintiff Manuel Roman (“Roman”) worked as a truck driver for Shipper’s West 7 Truckline, Inc. On September 3, 2013, he fell from the company truck as he exited the 8 cab and suffered a head injury. A few days later, on September 7, 2013, Roman went to 9 the emergency room at Wheaton Franciscan Healthcare (“Wheaton”) in Wisconsin. At 10 Wheaton, he was diagnosed with systolic hypertension and a concussion. 11 Roman next sought medical care on October 11, 2013, at Arrowhead Regional 12 Medical Center (“Arrowhead”) in California. At Arrowhead, a CT scan and examination 13 revealed a subdural hematoma. Roman received a subdural drain to dispel blood and 14 relieve pressure and was discharged on October 15, 2013. The discharge instructions 15 noted that Roman should “Resume Normal Activity and Return to work” the next day. 16 Roman returned to Arrowhead on October 31, 2013. The physician’s notes from that 17 appointment concluded: “Today the patient is doing well, with no symptoms, no 18 complaints, including denies pain or any neurological deficit.” 19 Roman filed a Worker’s Report of Injury with the Industrial Commission of 20 Arizona (“ICA”) on or around November 8, 2013. In the report, Roman noted he 21 suffered a “brain injury” described as a “blood clot in brain.” The report also included 22 contact information for Roman’s employer and limited information about medical 23 treatment Roman received. 24 Neither Roman nor his employer notified Berkshire Hathaway Homestate 25 Insurance Co. (“Berkshire”) of Roman’s injury after the incident. Berkshire first learned 26 of Roman’s claim when it received a “Notification of Claim” from the ICA, dated 27 November 14, 2013. The notification is a one-page document. It does not provide any 28 contact information for Roman, specify the nature or extent of any injury, or indicate -2- 1 whether Roman sought or received any medical treatment. Although the notification is 2 dated November 14, 2013, the record does not reveal when Berkshire actually received it. 3 On November 22, 2013, Berkshire opened a claim file based on the notification, 4 and by November 25, it had assigned an adjuster to handle the claim. The assignment 5 directed the adjuster to “verify [Roman’s] correct mailing address” and “obtain other 6 missing info,” explaining the file was set up based on limited information. It also stated 7 that Berkshire unsuccessfully attempted to find Roman’s address before assigning the file 8 to the adjuster. 9 The adjuster began evaluating the claim on the same day he received it. His first 10 contact was a phone call with the employer on November 25, 2013. The employer 11 informed the adjuster that Roman had not reported an injury and that his final day with 12 the company was on September 13, 2013. The adjuster called again two days later, on 13 November 27, to request Roman’s correct contact information, but was unable to reach 14 the employer or leave a message. The adjuster called again on December 2 and emailed 15 on December 4 to request Roman’s correct contact information. Finally, on December 5, 16 after obtaining Roman’s phone number, the adjuster contacted Roman to discuss his 17 claim. He described the conversation in his notes as follows: 18 19 20 21 22 23 I was able to speak with [Roman], but he did not go into specifics of the claim or his injury. He informed me that he needs medical treatment and that he has suffered brain hemorrhaging. He also informed me that he did report the injury to his employer and that his injury is due to his employer’s negligence. When I asked [Roman] to provide more information about the claim and injury, he indicated that he would prefer to have an attorney speak with me; [Roman] was not willing to continue the conversation. I provided my contact information and instructed [Roman] to have his attorney contact me as soon as possible.” 24 25 26 27 28 That same day, the claims adjuster called the employer. The employer again informed him it “never received any report of injury from [Roman]” and that Roman drove an additional ten days after his injury. Based on this preliminary investigation, the adjuster concluded he needed more information to determine the compensability of Roman’s claim. He noted in the claims -3- 1 diary: “As neither the claimant nor the employer were able to provide any information 2 about the alleged injury, the compensability of said injury is in question.” Accordingly, 3 on December 6, 2013, Berkshire submitted a “Notice of Claim Status” to the ICA, which 4 indicated Roman’s claim was denied pending further investigation. 5 The claims adjuster called Roman again on December 6. In that call, he obtained 6 more information about the incident and medical care Roman received, including phone 7 numbers for both Wheaton and Arrowhead. He called both facilities that same day and 8 requested Roman’s medical records. The Wheaton records arrived on December 19, 9 2013, and indicated two diagnoses: systolic hypertension and a concussion. The records 10 also showed a neurosurgeon reviewed the medical findings, including a CT scan, and 11 concluded they were “not consistent with traumatic injury.” 12 The adjuster made multiple efforts to procure the records from Arrowhead. He 13 sent a faxed request for records, as Arrowhead required, on December 6. The request 14 was not processed, however, and in a follow-up call with the hospital on January 3, 2014, 15 the hospital required another faxed request. The adjuster sent another request that same 16 day and then another on January 7, 2014. On January 17, 2014, he called Arrowhead to 17 check on the request. The hospital said it was more than two weeks behind on processing 18 such requests and suggested he call back the following week. He did so on January 24, 19 2014. In that call, Arrowhead confirmed it had processed the request and that the records 20 would be mailed either that same day or the next business day. Berkshire received the 21 Arrowhead records on January 30, 2014. 22 subdural hematoma and received a subdural drain to dispel blood and relieve pressure. 23 They made no finding of a concussion. The records indicated Roman suffered a 24 On February 3, 2014, within days of receiving and reviewing the Arrowhead 25 records, the adjuster sought to schedule an independent medical examination (“IME”). 26 The appointment was scheduled for February 27, 2014, with an independent neurologist, 27 Dr. Leo Kahn. Dr. Kahn concluded, in a report received no earlier than March 3, 2014, 28 that Roman’s “subdural hematoma is directly related to the 09/03/13 industrial injury” -4- 1 and that his treatment at Arrowhead was “in essence life-saving.” Based on this report, 2 Berkshire accepted Roman’s claim on March 6, 2014. Berkshire has paid all of Roman’s 3 medical bills submitted to it for related medical treatment since that time. 4 Roman filed this action on December 2, 2015. The lawsuit alleges Berkshire 5 breached its duty of good faith and fair dealing in handling Roman’s workers’ 6 compensation claim and seeks compensatory and punitive damages. Berkshire moves for 7 summary judgment on all claims. 8 III. ANALYSIS 9 Berkshire argues it is entitled to judgment as a matter of law on Roman’s bad faith 10 claim because (1) there is no evidence of a causal link between the alleged injury and 11 Berkshire’s “repeated delays” in processing Roman’s claim and (2) Roman’s claim was 12 fairly debatable. Berkshire further argues (3) the evidence does not support a claim for 13 punitive damages. Each argument is addressed in turn. 14 A. 15 “An insurer’s bad faith handling of an insurance claim, like any other tort, is 16 analyzed according to the principles of duty, breach, and proximately caused damages.” 17 Michelman v. Lincoln Nat’l Life Ins. Co., 685 F.3d 887, 900 (9th Cir. 2012). “Proximate 18 cause is found where, without any intervening cause and without the defendant’s act, the 19 injury would not have occurred.” Ferguson v. Cash, Sullivan & Cross Ins. Agency, Inc., 20 171 Ariz. 381, 386, 831 P.2d 380, 385 (App. 1991). Proximate Causation 21 Roman alleges Berkshire’s “repeated delays” in processing his claim resulted in 22 compensable injury. But Roman was injured on September 3, 2013, and Berkshire had 23 no notice of his claim until receiving the “Notification of Claim,” dated November 14, 24 2013, from the ICA. Thus, the relevant period for which Berkshire may be liable for any 25 aggravation of his medical condition is from the time it first received the November 14, 26 2013 notification and when it later accepted the claim on March 6, 2014. 27 In his deposition, Roman’s treating neurologist, Dr. Michael A. Epstein, testified 28 Roman probably would have had a better outcome had he been treated in a more timely -5- 1 fashion. He testified the overall delay in treatment affected Roman, but could not say 2 “with any degree of medical certainty” whether (1) the delay between Roman’s injury 3 and Berkshire’s notification of his claim or (2) the delay between Berkshire’s notification 4 and when it later accepted the claim made more of a difference. Indeed, he testified, “I 5 can’t say which delay absolutely made the critical difference at all.” Thus, the testimony 6 of Dr. Epstein does not establish with any degree of medical certainty that Berkshire 7 proximately caused Roman’s aggravation of injury. Roman’s failure to present any 8 expert testimony to establish this causal link is fatal to his claim. 9 Daugherity, CV-13-02136-PHX-ESW, 2015 WL 1346097, at *3 (D. Ariz. Mar. 24, 2015) 10 (“Unless an injury is obvious to the jury, expert medical testimony is required to establish 11 the nature and extent of the injury as well as its relationship to the accident.”); Rasor v. 12 Nw. Hosp., LLC, 239 Ariz. 546, 550, 373 P.3d 563, 566 (App. 2016) (“Expert medical 13 testimony is . . . generally required to establish proximate cause unless a causal 14 relationship is readily apparent to the trier of fact.”). Therefore, Berkshire is entitled to 15 summary judgment on that component of damages. See Gentry v. 16 Roman does not directly address the causation argument in his response. He does 17 argue, however, that he is entitled to damages for mental anguish, pain and suffering, 18 financial damage, and loss of enjoyment of life. See Mendoza v. McDonald’s Corp., 222 19 Ariz. 139, 149, 213 P.3d 288, 298 (App. 2009). Roman prayed for such damages in the 20 complaint (Doc. 1, at 10-11.) and expert medical testimony is not needed to establish 21 such damages. Accordingly, Berkshire is not entitled to summary judgment on this 22 component of damages for lack of evidence of causation. 23 B. 24 Summary judgment must be granted against Roman’s bad faith claim for lack of 25 bad faith. Bad faith arises when an insurer “intentionally denies, fails to process, or pay a 26 claim without a reasonable basis.” Zilisch v. State Farm Mut. Auto. Ins. Co., 196 Ariz. 27 234, 237, 995 P.2d 276, 279 (2000) (quotation omitted). The tort of bad faith has two 28 elements: (1) that the insurer acted unreasonably toward the insured and (2) that the Bad Faith -6- 1 insurer acted knowingly or with reckless disregard of the unreasonableness of its actions. 2 See id. at 238. Unreasonable actions include failure to “immediately conduct an adequate 3 investigation,” failure to “act promptly in paying a legitimate claim,” “forc[ing] an 4 insured to go through needless adversarial hoops to achieve its rights under the policy,” 5 and “lowball[ing] claims.” Id. An insurer may challenge claims which, after adequate 6 investigation, are “fairly debatable.” Id. at 237. “But . . . while fair debatability is a 7 necessary condition to avoid a claim of bad faith, it is not always a sufficient condition.” 8 Id. at 238. 9 Roman points to three separate actions by Berkshire which he argues constitutes 10 bad faith. First, Berkshire failed to provide equal consideration to Roman because it 11 instructed its adjusters to target and deny claims, as opposed to honestly investigate the 12 facts and evidence. Second, Berkshire failed to adequately investigate the claim because 13 it delayed initiating its claims process for eight days, failed to contact Roman for 20 days, 14 and failed to contact medical providers for 21 days. Third, Berkshire required an IME, 15 which was not necessary for a compensability determination related to Roman’s 16 concussion and subdural hematoma. None of these arguments has merit. 17 1. Policy or Practice of Berkshire 18 The first argument – that Berkshire instructed its adjusters to target and deny 19 claims – is unsupported by the record. Roman hinges this argument on a single quote 20 within a three-page “Claims Bulletin” of the insurer, which states: “The majority of 21 delays and investigate denials are issued to gather information needed to support a 22 denial.” As an initial matter, it is perfectly proper for an insurer to seek information to 23 support a denial. The insured must also seek out the information that would support a 24 claim. In any event, the quote is misleading when read in isolation. As the Bulletin 25 explains, there are four “strategic tracks” when evaluating the compensability of a claim, 26 including the initial “Investigate” track, which is where the quote is found. 27 Investigate track is used when “[t]he Claims Professional does not have enough 28 information to make a compensability determination.” The track is merely one of several -7- The 1 stages in evaluating a claim. As the Bulletin makes clear, additional action will always 2 follow the completion of an investigation, including accepting a claim: “The Investigate 3 strategic track will always result in additional action to be taken once the investigation 4 has been completed. In some instances it will mean accepting the claim . . . .” In short, 5 the very document on which Roman relies says all investigation will be done. Moreover, 6 there is no evidence here that the adjuster failed to investigate or give equal consideration 7 to all of the facts and circumstances favorable to Roman. The investigation was prompt 8 and earnest. Berkshire sought out the evidence favorable to Roman. 9 2. Adequacy of Investigation 10 The second argument regarding Berkshire’s investigation similarly fails because 11 the investigation indisputably was adequate. As discussed above, neither Roman nor 12 Roman’s employer notified Berkshire of the injury he suffered on September 3, 2013. 13 Ten weeks passed before Roman filed a worker’s compensation claim with the ICA and 14 more than another week passed before Berkshire first learned the claim. 15 “Notification of Claim” is a one-page document that does not include information about 16 the nature or extent of Roman’s injury, the medical treatment he received, or Roman’s 17 address or phone number. The 18 Roman complains about the adequacy of the investigation from when Berkshire 19 received the ICA notification and when it submitted a response on December 6, 2013. 20 The record does not indicate when Berkshire received the notification. However, even 21 assuming it was received on the earliest possible date, November 14, 2013, the record 22 shows Berkshire opened a case file within seven business days, on November 22. By 23 November 25, Berkshire assigned a claims adjuster to evaluate the claim and had 24 attempted at least once to verify Roman’s contact information. 25 On the same day the adjuster received the file, November 25, he started 26 investigating the claim. He contacted the employer at least four times from November 25 27 to December 4 to discuss the claim and to try to obtain Roman’s correct contact 28 information. When he finally received Roman’s contact information, the adjuster -8- 1 promptly called Roman on December 5. In that call, Roman “did not go into specifics of 2 the claim or his injury.” As the adjuster noted, “When I asked [Roman] to provide more 3 information about the claim and injury, he indicated that he would prefer to have an 4 attorney speak with me; [Roman] was not willing to continue the conversation. 5 provided my contact information and instructed [Roman] to have his attorney contact me 6 as soon as possible.” I 7 Neither Roman nor his attorney called the adjuster back by the next day, 8 December 6, 2013, the deadline for Berkshire to file its notice of claim status with the 9 ICA. However, the adjuster did reach Roman by phone again that day and learned more 10 about Roman’s injury and medical treatment he received, including phone numbers for 11 both Wheaton and Arrowhead. Berkshire was in no way at fault for not reaching Roman 12 earlier and not contacting the then-unknown medical providers earlier. 13 Roman complains that “[e]ven after Defendant finally contacted Mr. Roman, 14 Defendant continued to delay its investigation,” citing the length of time it took to receive 15 the medical records. But on the same day the adjuster received the contact information 16 for both Wheaton and Arrowhead, December 6, he called both facilities to request 17 Roman’s medical records and sent faxed requests as well. The Wheaton records arrived 18 within two weeks, on December 19. The Arrowhead records arrived several weeks later, 19 on January 30, 2014. The adjuster’s efforts in the interim were far from unreasonable: 20 between December 6, 2013, and January 24, 2014 (when Arrowhead confirmed it had 21 processed the request), the adjuster called or faxed Arrowhead on at least six separate 22 occasions to try to obtain the records. Berkshire is not responsible for the medical 23 providers’ delays in sending medical records despite Berkshire’s repeated requests. 24 Moreover, on February 3, 2014, within days of receiving the Arrowhead records 25 on January 30, 2014, the adjuster sought to schedule an IME. The IME occurred on 26 February 27, 2014, which was prompt. Based on the IME report, which Berkshire 27 received no earlier than March 3, 2014, Roman’s claim was accepted on March 6, 2014. 28 -9- 1 In sum, the record reveals the investigation was adequate.1 2 3. Independent Medical Examination 3 Finally, Roman attacks Berkshire’s decision to schedule an IME, asserting it was 4 not necessary for making a compensability determination. An insurer is entitled to seek 5 an independent medical examination not only to determine a claimant’s need for 6 treatment, Mendoza, 222 Ariz. at 159, 213 P.3d at 308, but also “to ensure further 7 medical treatment is necessary.” Demetrulias v. Wal-Mart Stores Inc., 917 F. Supp. 2d 8 993, 1007 (D. Ariz. 2013). In addition, an insurer may reasonably schedule an IME to 9 determine the cause and extent of an injury. See, e.g., Bronick v. State Farm Mut. Auto. 10 Ins. Co., CV-11-01442-PHX-JAT, 2013 WL 3716600, at *9-12 (D. Ariz. July 15, 2013) 11 (granting insurer’s motion for summary judgment on bad faith claim even though insurer 12 required plaintiff to attend an IME to determine the cause of plaintiff’s injury). 13 Here the medical records gave a focused need for an IME. The Wheaton records 14 indicate Roman went to the emergency room a few days after the fall reporting a 15 headache that would not resolve. Roman reported a history of hypertension and not 16 being complaint with his medications. As was later explained, the headaches Roman 17 complained of “may . . . have been amplified by uncontrolled hypertension.” The 18 Wheaton records unclearly presented the nature of Roman’s injury and were divergent in 19 that they indicated a concussion yet concluded Roman’s symptoms were “not consistent 20 with traumatic injury.” The Arrowhead records identified a subdural hematoma, which 21 required a subdural drain to dispel the blood, but not a concussion. The Arrowhead 22 discharge report noted Roman could return to work the next day and the notes from his 23 24 25 26 27 28 1 There was no slack in Berkshire’s investigation. But even if there was, that would not make a case of bad faith. See Rawlings v. Apodaca, 151 Ariz. 149, 157, 726 P.2d 565, 573 (1986) (“Insurance companies . . . are far from perfect. Papers get lost, telephone messages misplaced and claims ignored because paperwork was misfiled or improperly processed. Such isolated mischances may result in a claim being unpaid or delayed. None of these mistakes will ordinarily constitute a breach of the implied covenant of good faith and fair dealing, even though the company may render itself liable for at least nominal damages for breach of contract in failing to pay the claim.”); Miel v. State Farm Mut. Auto. Ins. Co., 185 Ariz. 104, 110, 912 P.2d 1333, 1339 (App. 1995) (“Mere mistake and inadvertence are not sufficient to establish a claim for bad faith.”). - 10 - 1 follow-up appointment stated: “Today the patient is doing well, with no symptoms, no 2 complaints, including denies pain or any neurological deficit. The patient did not need all 3 of his pain medicines per his report.” 4 The medical records thus raised questions regarding the nature, cause and extent 5 of Roman’s injury. For example, the records did not establish whether or when Roman’s 6 subdural hematoma resolved; the extent to which Roman’s uncontrolled hypertension 7 played a role; whether Roman’s delay in seeking treatment impacted his condition; and 8 whether the treatment Roman received was reasonable and necessary. In light of the 9 conflicting records and unresolved questions, the insurer reasonably sought an IME to 10 assess the compensability of Roman’s claim. Berkshire asked the IME physician to 11 answer the following questions: 12 13 14 15 16 17 18 19 20 21 22 23 1. Please advise Mr. Roman’s diagnosis from both Wheaton Franciscan Healthcare and Arrowhead Regional Medical Center. Please explain the diagnosis in relation to his method of injury. 2. Please address whether assuming there is some injury attributable to the fall on 09/03/13 his delay in seeking treatment or reporting to his employer made or makes [it] more difficult to investigate. 3. Do you feel the recommended surgical treatment was reasonable and necessary? Please explain. 4. Has Mr. Roman reached maximum medical improvement in relation to the 09/03/13 injury, and if so on what date? 5. If Mr. Roman has not reached maximum medical improvement, what type of medical treatment would you recommend? 24 6. Has Mr. Roman sustained any permanent impairment in relation to the 09/03/13 injury? 25 7. Please address work capabilities in relation to the 09/03/13 injury. 26 27 28 (Doc. 61, Ex. 14 at 4-6.) Based on the assessment of the IME physician, Berkshire promptly accepted Roman’s claim. Thus, contrary to Roman’s characterization, the IME was not “an - 11 - 1 unnecessary hoop,” but rather a reasonable part of the investigation. As there is no 2 evidence of bad faith, summary judgment on this claim will be granted. 3 C. 4 To receive punitive damages, a defendant must be liable for bad faith and “a 5 plaintiff must prove by clear and convincing evidence that the defendant’s conduct was 6 undertaken with an evil mind.” Tritschler v. Allstate Ins. Co., 213 Ariz. 505, 517, 144 7 P.3d 519, 532 (App. 2006) (quotation omitted). As discussed above, Berkshire is not 8 liable for bad faith; therefore, punitive damages are not available. But even if Berkshire 9 were liable on the tort claim, there would still be an insufficient basis for punitive 10 damages. An “evil mind” requires either that the “defendant intended to injure the 11 plaintiff” or that the “defendant consciously pursued a course of conduct knowing that it 12 created a substantial risk of significant harm to others.” Rawlings, 151 Ariz. at 162, 726 13 P.2d at 578. 14 Summary judgment will be granted against Roman’s claim for punitive damages. 15 16 17 18 Punitive Damages Here the undisputed evidence does not allow an inference of either. IT IS THEREFORE ORDERED that Defendant’s Motion for Summary Judgment (Doc. 55) is granted. IT IS FURTHER ORDERED that the Clerk enter judgment against Plaintiff on his complaint and in favor of Defendant, and that Plaintiff take nothing. 19 The Clerk shall terminate this case. 20 Dated this 6th day of September, 2017. 21 22 23 24 25 26 27 28 - 12 -

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