Knuth v. Paul Revere Life Insurance Company et al

Filing 575

*ORDER The Court will ADOPT the R&R's findings of fact and conclusions of law (Doc. 561-1, redacted at Doc. 561). Plaintiff's Motion for Partial Summary Judgment re: Disability (Doc. 421 ) is DENIED. Defendants' Motion for Partial Summary Judgment (Doc. 461) is DENIED. Signed by Chief Judge Raner C Collins on 3/31/2017. (See attached PDF for complete information)(DLC) *Modified on 3/31/2017 to remove hyperlink from 461(DLC).

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Randall Knuth,

No. CV-14-02387-TUC-RCC

Plaintiff,

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ORDER

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v.

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Paul Revere Life Insurance Company, et
al.,

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Defendants.

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On February 6, 2017 the Honorable D. Thomas Ferraro, United States Magistrate

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Judge, filed a Report and Recommendation (“R&R”) in this action. Doc. 561-1. The

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R&R recommends this Court deny Plaintiff’s Motion for Partial Summary Judgment re:

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Disability (Doc. 421) and deny Defendants’ Motion for Partial Summary Judgment (Doc.

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461). Id. at 17.

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The parties did not object to the recommendation that this Court deny Plaintiff’s

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Motion for Partial Summary Judgment re: Disability (Doc. 421). Defendants did file

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timely objections to the recommendation that this Court deny their Motion for Partial

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Summary Judgement (Doc. 461).

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Defendants’ objections. Doc. 568.

Doc. 567.

Plaintiff filed timely responses to

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The Court has considered all of the foregoing circumstances and pleadings, as well

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as the parties’ underlying briefs. As to the Plaintiff’s Motion for Partial Summary

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Judgment (Doc. 421), the Court will adopt Judge Ferraro’s findings of fact and

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conclusions of law and will deny the motion. As to Defendants’ Motion for Partial

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Summary Judgment (Doc. 461), the Court will adopt Judge Ferraro’s findings of fact and

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conclusions of law and will deny the motion

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STANDARD OF REVIEW AND SUMMARY JUDGEMENT STANDARD

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The duties of the district court in connection with a R & R are set forth in Rule 72

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of the Federal Rules of Civil Procedure and 28 U.S.C. § 636(b)(1). The district court

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may “accept, reject, or modify the recommended disposition; receive further evidence; or

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return the matter to the magistrate judge with instructions.” Fed. R. Civ. P. 72(b)(3); 28

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U.S.C. § 636(b)(1). The Court will not disturb a magistrate judge’s order unless his

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factual findings are clearly erroneous or his legal conclusions are contrary to law. 28

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U.S.C. § 636(b)(1)(A). “[T]he magistrate judge’s decision…is entitled to great deference

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by the district court.” U.S. v. Abonce-Barrera, 257 F.3d 959, 969 (9th Cir. 2001).

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Where the parties object to an R & R, “[a] judge of the [district] court shall make a

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de novo determination of those portions of the [R & R] to which objection is made.” 28

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U.S.C. § 636(b)(1); see Thomas v. Arn, 474 U.S. 140, 149-50 (1985). When no objection

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is filed, the district court need not review the R & R de novo. Wang v. Masaitis, 416 F.3d

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992, 1000 n. 13 (9th Cir.2005); United States v. Reyna-Tapia, 328 F.3d 1114, 1121-22

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(9th Cir. 2003) (en banc); see also, Arn, 474 U.S. at 149 (“[Section 636(b)(1) ] does not

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... require any review at all ... of any issue that is not the subject of an objection.”).

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A motion for summary judgment may be granted only where there is “no genuine

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issue as to any material fact and ... the moving party is entitled to a judgment as a matter

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of law.” Fed.R.Civ.P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322, (1986).

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When assessing the record to make this determination, the “evidence of the non-movant

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is to be believed, and all justifiable inferences are to be drawn in his favor.” Anderson v.

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Liberty Lobby, Inc., 477 U.S. 242, 255 (1986) (citing Adickes v. S.H. Kress & Co., 398

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U.S. 144, 158–59, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970)). Courts recognize that

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“[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate

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inferences from the facts are jury functions, not those of a judge....” Id. at 255.

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ANALYSIS
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Plaintiff’s Motion for Partial Summary Judgment Regarding Disability

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Here, the parties have not objected to the portions of the R&R addressing

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Plaintiff’s Motion for Partial Summary Judgment Regarding his Disability Status. As

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such the Court is relieved of its obligation to review the same. See Reyna-Tapia, 328

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F.3d at 1121. Nonetheless, this Court has reviewed the record de novo in conjunction

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with the R&R’s recommended disposition of the motion. This Court considers the R&R

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to be thorough and well-reasoned on this issue. Accordingly, the Court will adopt the

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R&R’s findings of fact and conclusions of law (Doc. 561-1, in part) and will DENY

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Plaintiff’s Motion for Partial Summary Judgment (Doc. 421).

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B.

Defendant’s Motion for Partial Summary Judgment Regarding Plaintiff’s

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Claims of Bad Faith and Punitive Damages

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Defendants’ categorize their objections to the R&R as follows:

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Defendants respectfully submit the R&R misapplied the … law to the
undisputed facts in reaching the conclusion that the bad faith and punitive
damage claims should go to the jury. The facts of the claim handling are
undisputed and documented in Defendants’ claim file. Plaintiff argued
inferences of unreasonable conduct based on these undisputed facts. The
R&R accepted a number of these inferences, even though they are
unsupported by the facts.

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Doc. 567 at 2.

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This Court interprets this introductory paragraph as an assertion that Defendants’

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do not object to the R&R’s conclusions of law. Accordingly, the Court is relieved of its

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obligation to review the same. See Reyna-Tapia, 328 F.3d at 1121.

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Instead, Defendants’ seven objections would appear to concern the R&R’s

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inherent assertion(s) that the following constitute supported, potentially legitimate factual

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inferences (i.e. questions for a jury) underpinning Plaintiff’s bad faith and punitive

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damages claims:

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1. Whether Plaintiff “revoked his authorization [to allow Unum to
interview McFarland] and, if he did, whether Unum complied with
[Plaintiff’s] revoked authorization and Arizona law” in so interviewing
McFarland. Doc. 567 at 4 (citing Doc. 561-1 at 13).
2. Whether evidence of Plaintiff’s pain in Unum’s surveillance footage was
willfully ignored or suppressed by Defendant Unum. Doc. 567. at 5 (citing
Doc. 561-1 at 14).
3. Whether Dr. Philbin’s (Unum’s on-site physician) attempted to
inappropriately influence Dr. Rogers (a physician not employed by or
affiliated with Defendants), in such a way as to negatively impact the
former’s credibility and in such a way as to constitute evidence of Unum’s
bad faith insurance practices. Doc. 567 at 5-6 (citing Doc. 561-1 at 14).
4. Whether Dr. Roger’s opinion was improperly rejected by Defendant
Unum. Doc. 567 at 7(citing Doc. 561-1 at 14-15).
5. Whether the timing and substance of Sara McKinnon’s December 2,
2015 referral email to Quality Compliance Consultant Diane Cahill, when
considered in conjunction with other evidence that ninety-nine percent of
files sent to Cahill are targeted for termination, is evidence that the denial
of Plaintiff’s claim was a fait accompli and undertaken in bad faith. Doc.
567 at 7-9 (citing Doc. 561-1 at 15).
6. Whether “so-called round tables” were designed to insure proper claims
handling, or were, in fact, a subterfuge designed to cover wrongful claims
terminations. Doc. 567 at 9 (citing Doc. 561-1 at 15).
7. Whether the body of information Unum made available to its vocational
reviewer was relevant to whether Unum “willfully ignored evidence of its
insured’s disability.” Doc. 567 at 10 (citing Doc. 561-1 at 16).
The Court has reviewed the record1 de novo with respect to the aforementioned

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The Court observes, with respect to inference 1 and 5, that Defendants have
urged consideration of evidence contained in various “Defendant’s Exhibits.” A review
of the record confirms Defendants’ citations do not refer to any exhibit attached to their
Statement of Facts (Doc. 469), nor any exhibit attached to Plaintiff’s Controverting
Statement of Facts (corrected at Doc. 508). Rather, the cited exhibits are attached to a
“Declaration of Daniel W. Maguire [Filed concurrently with Defendants’ Reply in
Support of Motion for Partial Summary Judgment and Reply in Support of Separate
Statement of Facts (Doc. 508)].” Doc. 515. Said declaration and accompanying exhibits
were submitted in support of Defendants’ Reply in Support of Motion for Partial
Summary Judgment and Reply in Support of Separate Statement of Facts. Doc. 514.
Local Rule of Civil Procedure for the District of Arizona (“LRCiv”) 56.1 specifies
the procedure the parties are to adhere to in when filing motions for summary judgment.
Section a of the Rule requires the party moving for summary judgment to file a separate
statement of facts with its motion. The non-moving party must then file a statement,
separate from its memorandum, that specifically responds to each of the moving party's
statements of fact and that sets forth any additional facts that make summary judgment
inappropriate. L.R.Civ. 56.1(b). Local Rule 56.1 does not contemplate a movant
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inferences.

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justifiable inferences in his favor, the Court agrees with the R&R and finds all of the

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aforementioned inferences of bad faith practices (unreasonable behavior) sufficiently

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supported by evidence in the record and appropriate jury questions.

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Accepting the evidence proffered by Plaintiff as true and drawing all

With respect to inference 1, the Court notes that Plaintiff correctly identifies that

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the objection implicates a question of law.

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reasonableness of an insurer's actions in handling a claim must be evaluated as of the

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time of those actions based on what it knew when it acted. See Mendoza v. McDonald’s

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Corp., 213 P.3d 288, n.31 (Ariz. App. 2009) (“The reasonableness of an insurer’s actions

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in handling a claim must be evaluated as of the time of those actions based on what it

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knew when it acted”). Defendants did not, at the time of the claims-decision to interview

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McFarland, possess the post-interview statements it references in its objections2.

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Defendants cannot rely upon such statements to argue that Plaintiff failed to show

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evidence giving rise to a legitimate inference of bad faith.

That is, under Arizona law, the

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If a jury were to reach the conclusions Plaintiff advocates and Defendants debates

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(implicated in the inferences listed above), then the jury could conclude that Defendants

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were pursuing a course of conduct serving their own interests and in conscious disregard

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for the fact that their investigation, evaluation and/or processing of Plaintiff’s claim was

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attaching additional exhibits to its reply in support of summary judgment or the filing a
separate response to the non-moving party's statement of facts. Although a party may
object to facts introduced by the non-moving party in its opposition, the reply “may not
introduce new facts or evidence.” EEOC v. Swissport Fueling, Inc., 916 F.Supp.2d 1005,
1016 (D.Ariz. 2013)(internal citations omitted); see also, Parker v. Arizona, No. CV-08656-TUC-AWT, 2013 WL 3286414, at *8 (D. Ariz. June 28, 2013). “This is consistent
with the moving party's need to show no genuine issue of material facts exists and that
there is no need for a trier of fact to weigh conflicting evidence, assuming the nonmoving party's evidence is true.” EEOC v. TIN Inc., No. CV–06–1899–PHX–NVW,
2008 WL 2323913, at *1 (D.Ariz. June 2, 2008), rev'd on other grounds, 349 Fed.Appx.
190 (9th Cir.2009). Accordingly, the Court will not consider this additional evidence in
its evaluation of the motion(s) at issue. See LRCiv 7.2(i).
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This evidence is included amongst the improperly submitted facts noted in FN1,
above. Though the Court will not consider the evidence as grounds for granting
Defendants’ Motion for Summary Judgment, the Court finds it appropriate to comment
on the same for purposes of clarifying its ruling on a question of law relevant to the
claims Plaintiff will present at trial.
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objectionably unreasonable. See Zilich v. State Farm, 196 Ariz. 234, 328 (2000); Trus

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Joist Corp. v. Safeco, 153 Ariz. 95, 104 (App. 1986). Evidence of such bad faith

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conduct, in turn, provides a sufficient basis to send the punitive damages issue to the jury.

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See Gurule v. Illinois Mutual Life & Cas. Co., 152 Ariz. 600, 602 (1987); Leavey v.

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Unum Provident Corp., 295 Fed.Appx. 255 at *2 (9th Cir. 2008). That is, a jury could

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find, based on the same behavior, that Unum acted with an evil mind because it “acted to

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serve [its] own interest, having reason to know and consciously disregarding a substantial

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risk that [its] conduct might significantly injure the rights of others.” Bradshaw v. State

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Farm Mut. Auto. Ins. Co., 157 Ariz. 411, 758 P.2d 1313, 1324 (1988). Accordingly, the

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Court will adopt the Court will adopt the R&R’s findings of fact and conclusions of law

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(Doc. 561-1, in remaining part), as supplemented by the findings in this order and will

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deny Defendants’ Motion for Partial Summary Judgment (Doc. 461) regarding Plaintiff’s

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bad faith and punitive damages claims.

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IT IS ORDERED
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561-1, redacted at Doc. 561).
2.

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The Court will ADOPT the R&R’s findings of fact and conclusions of law (Doc.

Plaintiff’s Motion for Partial Summary Judgment re: Disability (Doc. 421) is
DENIED.

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Defendants’ Motion for Partial Summary Judgment (Doc. 461) is DENIED.
Dated this 31st day of March, 2017.

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